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WHAT A SALESMAN SHOULD KNOW 
ABOUT 

CREDITS 


A Hand Book of Practical Information of Value to a Salesman 
in Increasing the Net Profits on His Sales; Building Up 
His Territory and Working in Closer Harmony 
With the Credit Department 


Four 


Edited by 

J. C. ASPLEY 

Years on the Editorial Staff of “ Printers' Ink;" Author 
“ Salesman's Correspondence Manual" and Other 
Books for Salesmen 



POCKET EDITION 
Price One Dollar 






Published by 


THE DARTNELL CORPORATION 


608 So. Dearborn Street 
Chicago, Ill. 


All privileges of reproducing 
illustrations or letter press 
expressly reserved by the 
publishers 


€ 


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Copyright 1918 by 
J. C. ASPLEY 
Chicago 







I T IS NOT the purpose of this manual to make 
credit men out of salesmen, with whom the 
securing of orders must always be the first 
and foremost consideration. 

Neither is it the purpose of this manual to 
burden a salesman with useless information 
upon a subject of endless ramifications. The 
proper handling of credits is a business in itself, 
just as selling is a business in itself. It would 
indeed be folly to presume that a salesman can 
learn in one hour from a book, what it has taken 
a credit man years to learn from hard ex¬ 
perience. 

Nevertheless, credits and selling are closely 
intertwined. There is a growing tendency 
among progressive credit managers to depend 
more and more on the co-operation of the sales¬ 
man. He is the man on the ground. 

So in this manual, it is our purpose to dis¬ 
cuss some of the more important things a sales¬ 
man should know about credits—especially the 
relation of credits to sales. We believe that such 
knowledge will broaden a salesman out; that it 
will give him a fuller appreciation for the co-op¬ 
eration he receives from the credit department, 
and will help the credit department to help him. 


More important still, it will help him to become 
a bigger producer of business, not only enabling 
him to increase his immediate sales, but equip¬ 
ping him to help his customers develop into 
100 per cent accounts. 

We bespeak for this little book a careful 
reading. To be reminded of an old truth is quite 
as important as to learn a new one, and you 
never know at what moment a circumstance 
will arise when the very information that seems 
useless today, may be of incalculable service and 
worth. 

We take this opportunity to thank the many 
subscribers to the Dartnell Sales Service who 
unselfishly gave of their experience and time 
that this manual might be of maximum value to 
salesmen. We also wish to thank Mr. J. C. Nevin 
of the Federal Reserve Bank of Cleveland, Mr. 
William Walker Orr of the National Association 
of Credit Men, Professor Harrison Me Johnston 
of the School of Commerce of the University of 
Illinois, Mr. R. E. Neuse of the Committee of 
Credits for the National Wholesale Grocers' As¬ 
sociation, Mr. Wm. F. H. Koelsch, New Nether- 
land Bank of New York, and former president 
National Association of Credit Men. 


Whu Men Fail in Business 



Incompetence 

and Inexperience 
48.3 


During the year 1917 there iuere 
13,026 Business Failures rauoluiri$ 
a loss of over 81 Million Dollars- 



YOU CAM HELP TO CUT DOWN THE LOSS 
THIS YEARL 




% 

t k \ h 


Lack. Uncontrollable Fraud Neglect Competition Unwise Uncharted 
of Capital Conditions of Business Credits 

31.9/ 18/ 5 . 7 % 52 % 2 % 1.9'/ 1/ 


Copyrighted, 1918, by J. C. Aspley, Chicago 








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PART ONE 


Information for a Salesman’s Own Use 

I—How Credit Knowledge Helps a Salesman 

II—The Principles Underlying Credit 

III— Getting a “Line” on a New Customer 

IV— How to Analyze a Financial Statement 

V— References—Good, Bad and Indifferent 

VI— Keeping Tab on Old Customers 

VII—Credit Safe-Guards 

VIII—Legal Phases of Credit 

IX—Short Term Sales and the Salesman 

X—Something About Trade Acceptances 



Buying, selling and credits are like the 
engine, tender and cars of a train. They must 
pull together. Each has its work to perform. 
One is no good without the other. 

Somewhere I have seen the salesman de¬ 
scribed as the engine, steam, coal and all. Not 
so. The salesman is just the engineer furnishing 
the force. The buyer is the tender supplying the 
material. The credit man is the car that carries 
the load. Credits properly made mean profit and 
salaries. Credits improperly made mean loss 
and failure. 


—WALTER D. MOODY. 






I—How Credit Knowledge 
Helps a Salesman 

Statistics show that most salesmen who 
start in business for themselves fail! 

Westinghouse was a great salesman. His 
sales feats astounded the world. Yet a whole 
houseful of orders did not prevent his failing. 

These salesmen fail, not because they do not 
know how to get business, but because they do 
not fully realize that a sale is not a sale, until 
a profit has been deposited in the bank. They let 
enthusiasm and optimism run away with business 
judgment. 

On the other hand, once a salesman has fully 
awakened to the relationship that exists between 
selling and credit, he has taken a big forward 
step, because in the last analysis, a salesman's 
earning capacity is not measured by the orders 
he books, but by the profit he nets . Sales history 
is full of instances of where salesmen have been 
selected for high salaried executive positions, not 
because they know how to get large orders, but 
because they know how to make small orders pay 
big profits. 


9 


WHAT A SALESMAN SHOULD KNOW 


As a salesman you are in exactly the same 
position as a man running his own business. You 
cannot neglect the credits or collections. A hun- 
dred-dollar credit loss will wipe out the profit 
on a thousand-dollar sale. Loose collections will 
ruin any territory. You want sales, of course, 
but above all, you must have profitable sales. A 
salesman with an intimate knowledge of credits 
is in a much better position to make profitable 
sales, than one with only a slight knowledge. 

George Perkins was once an insurance agent 
in Cleveland. He was promoted to a position in 
the Home Office. His successor wrote up a man 
for $50,000 whom Perkins had been trying to 
write for ten years. Perkins wrote this new man 
in Cleveland asking how he got the policy. He 
urged him to be frank. The reply came back: 

“You called upon him and talked endowment 
policy, twenty pay life, etc., and he did not under¬ 
stand what you were talking about; being human 
he did not want to say so, but half the time he did 
not know whether you were trying to sell him in¬ 
surance or hair oil, so he never signed." 

Many of us, like Perkins, are strong sales¬ 
men, but we take things for granted. We think 
because a thing is ABC to us, that it is ABC to 
our prospects. In order to make men think our 
way we have to talk in terms that they can un¬ 
derstand, and this holds true in talking mer- 


10 




HOW CREDIT KNOWLEDGE HELPS A SALESMAN 


chandise or in talking credits. Too many of us 
use technical terms, which even we ourselves do 
not understand. 

“Some of the most confusing words,” said 
W. C. Standish, sales manager for the United 
States Tire Company, before a meeting of credit 
men recently, “especially to the smaller mer¬ 
chant, are Financial Statements, Assets and Li¬ 
abilities. The men of big business, of course, 
understand fully what a financial statement is 
and what it means, but with the small merchant 
it is entirely different. He becomes timid when 
asked to put his name on a sheet that shows a 
lot of words separated by dotted lines and at 
the bottom the words ‘sign here.' 

Making Credit Terms Clear 

“Therefore, in talking to this class of trade, 
a salesman should know enough about credits to 
be able to explain that a customer is not signing 
away his life, but all that is wanted is a record 
of his worth at the time, the money he has in the 
bank, the value of his stock, the money that is 
owing him, and the other items are listed merely 
to help the merchant remember items which may 
be a basis of credit, though the buyer may not 
think them worth mentioning. We ought to talk 
to our trade in language that is understood by 
them.” 


11 




WHAT A SALESMAN SHOULD KNOW 


But the main value of credit knowledge to 
a salesman is that it will actually help him to 
increase sales. 

As an example, take the case of a salesman 
representing a large Saint Louis grocery jobber. 
This salesman in making his round of calls in 
Arkansas found that one of his customers had 
changed hands, and that the office had never 
been notified of the change. The new owners 
were quite willing to continue the old arrange¬ 
ment, but the salesman declined to commit the 
house without first wiring for authority. As it 
was Saturday morning, his wire did not arrive 
at the office until after the credit manager had 
left, so the assistant sales manager took it upon 
himself to wire back: “Credit manager gone for 
the day, but think it 0. K. to take a chance if 
everything looks right to you.” 

How One Salesman Used Knowledge 

Under like circumstances most salesmen 
would have needed no further encouragement, 
but would have continued the arrangement with¬ 
out inquiry. “Why should I worry,” the average 
man would have said, “it's my place to get the 
orders and the credit department's job to get 
the money.” This particular salesman, however, 
had the executive's viewpoint. He was a repre¬ 
sentative first and a salesman second. So he 
spent that Saturday afternoon in making a few 


12 




HOW CREDIT KNOWLEDGE HELPS A SALESMAN 



W lien Salesman and Credit Department Pull Together 


This cartoon has been widely used to graphically show 
the value of co-operation. Every successful salesman be¬ 
lieves in co-operation. There are some salesmen, however, 
who have yet to learn how thoroughly it pays to co-operate 
with the credit department. 


13 
















WHAT A SALESMAN SHOULD KNOW 


guarded inquiries about the new concern, and 
unearthed some startling facts. Two bankers in¬ 
terviewed, for example, told him that they 
wouldn’t advise a credit of as much as ten dol¬ 
lars. Other information he gathered was equally 
alarming, and the salesman reluctantly decided 
that it would not be wise to renew the contract. 

A Good Stroke of Business 

Now we come to the most unusual part of 
the story. After arriving at this conclusion, a 
short sighted salesman would have disposed of 
the matter by merely advising his home office 
as to what he had done, and passed on to the 
next town. Not so this salesman. He wanted 
business badly, but he didn’t want it unless the 
money was in sight. It occurred to him that a 
frank discussion of the situation with his cus¬ 
tomer might bring about some solution whereby 
he could get both the business and the money. 

So after supper Saturday evening the sales¬ 
man went over to the store and told the partners 
that after talking to several bankers he did not 
feel he would be justified in recommending to 
his house that the agency be left with them. 

The new firm was made of better stuff than 
at first appeared. The two partners received the 
salesman’s manly turn-down in the spirit in 


14 




HOW CREDIT KNOWLEDGE HELPS A SALESMAN 


which it was intended. They admitted they had 
much to learn and asked the salesman to stay 
over Sunday to help them work out some prac¬ 
tical plan which would enable them to put their 
business on a better financial foundation. 

The salesman, impressed by the open-mind¬ 
edness of the men, and their determination to 
succeed, stayed over. Sunday morning they all 
went over the books together. The salesman had 
been trained in credits and finances. He saw the 
nigger-in-the-wood-pile, and made certain recom¬ 
mendations to the partners. These recommenda¬ 
tions called for a re-arrangement of assets and 
the addition of some extra funds. The sugges¬ 
tions of the salesman were followed. Today, the 
concern is an undisputed success, a very de¬ 
sirable account, and the partners' best friend is 
the salesman who had the courage to tell them 
he was afraid they would go broke before his 
company's bills were paid. 

Help Credit Department to Help You 

Not every salesman, of course, has the time 
or the training to give his customers this sort 
of service. Indeed, the question might well be 
raised as to whether a salesman is not wasting 
time which he could spend to better advantage 
in getting unquestionable accounts. Neverthe¬ 
less, this incident serves to illustrate how a 


15 




WHAT A SALESMAN SHOULD KNOW 


knowledge of credits helped one salesman, and 
thus brings home to you how a similar knowl¬ 
edge might help you. 

The modern salesman is undergoing a rapid 
and decided evolution. The time has passed 
when being merely a good fellow will suffice. 
To remain successful in the face of the trying 
times ahead, the salesman of today must know 
many things which the salesman of yesterday 
never bothered about. He must be salesman, 
technical expert and business counsellor in one. 
He must be posted on all phases of merchandis¬ 
ing that will help him to help his customers. 
Above all, he must be posted on business finance, 
which includes everything related to credit. 

Such knowledge will make you a bigger man 
in the eyes of your customer; it will help the 
credit department to help you; it will help you 
to bigger earnings through bigger net profits; 
it will give you a broader insight into business 
affairs, thus qualifying you just that much more 
for an executive position; and last but not least, 
it will equip you to give counsel and co-operation 
to those of your customers who will appreciate 
your help. 


16 




II—The Principl es Underlying 
Credit 

There are three good reasons why credits 
are becoming more and more an important part 
of a salesman's work. 

First of all, we are operating in a day of 
high price levels. To cover the higher prices 
merchants are asking for larger credits. Not 
many are reducing their stocks. What is going 
to happen when a downward trend of prices sets 
in? What is going to happen when the merchant 
who is already skating on thin ice finds his stock 
dwindling in value as prices recede? 

Second, we are living in an age of close 
margins. The dealer is not the factor he once 
was in the scheme of distribution. Some prod¬ 
ucts, for instance, are in such great demand by 
consumers that manufacturers and wholesalers 
do not find it necessary to pay the dealer much 
for selling them. The dealer's profit, for ex¬ 
ample, on the sale of one package of Uneeda 
Biscuit is small. But computed on the basis of 
a year's capital turn-over it is quite large. It is 
the same with many other products. 

To make money the dealer must turn his 
stock quickly, and keep turning it. He must 
be educated to that end. He must be taught to 
take his discounts and collect his money quickly 


17 


WHAT A SALESMAN SHOULD KNOW 


so that he can buy more goods and take more 
discounts. It is to the salesman's interest to help 
his customers develop a quick turning business, 
and this may be done through a judicious and 
wisely applied credit policy. 

Third, the methods of compensating sales¬ 
men are undergoing an evolution. On every hand 
we hear of concerns putting in elaborate systems 
for ascertaining selling costs. Salesmen are be¬ 
ing paid, not on the basis of the business they 
book, but on the basis of net profit produced over 
a period of time. 

Paying Salesman for Good Credits 

Recently a profit sharing plan was sub¬ 
mitted to us by a large tire manufacturer for 
review. It called for a division of profits on a 
sliding scale basis. Under this plan each sales¬ 
man is put in a group according to his gross 
sales, and a different percentage of profits is 
awarded to each group. The first group, for 
example, is made up of salesmen selling $35,000 
or more a year. A salesman in this group, who 
shows a net profit to the house of ten per cent 
on a year’s sales, gets a bonus of four per cent 
net profits on his sales. If this same salesman, 
by extra effort and a careful handling of credits, 
is able to increase this net profit to fifteen per 
cent, he is entitled to six per cent for himself. 


18 




THE PRINCIPLES UNDERLYING CREDIT 


If he does still better and shows a twenty per 
cent net profit, he gets eight per cent for his 
share. 

A few years ago compensation plans of this 
kind were the exception. Today they are the 
rule. Tomorrow they will be universal. So you 
see, it is to every salesman's personal and finan¬ 
cial advantage to show large net profits. He 
cannot afford to neglect credits. The modern 
salesman regards himself as an assistant credit 
manager. 

“But,” you say, “I appreciate all this. What 
I want to know is how to ‘size up' a credit risk?” 
There is no cut and dried formula for sizing up 
a credit risk, any more than there is a cut and 
dried formula for selling goods. There are, how¬ 
ever, certain fundamental principles which ap¬ 
ply to credits, just as there are equally positive 
principles which relate to selling. Let us briefly 
consider some of the more important of these 
principles. 

What is a Good Credit Risk? 

When asked to sum up his understanding of 
the elements which make up a good credit risk, 
a prominent Boston credit man said: “Capabil¬ 
ity, Character and Capital.” 

This comes very near to covering the whole 
situation in three words. 


19 




WHAT A SALESMAN SHOULD KNOW 


Different persons have different ideas as to 
what constitutes a good “risk.” The banker 
places great stress on a man's finances. He de¬ 
mands to see a financial statement, and he uses 
his blue-pencil unmercifully on any item that 
has not a liquid valuation—that is to say, an 
item that could not be readily converted into 
cash. But the business man must take a chance. 
So he attaches equal importance to a man's 
capability and character, because he knows that 
a capable man, of good character, will usually 
make up in energy and ideas what he lacks in 
capital. 

Capitalize Your Knowledge of Men 

Every business man numbers among his best 
customers concerns who, when they started out, 
had barely enough money to open a checking 
account, but knowing them to be “live wires” the 
house extended to them credit facilities which 
would make the conservative banker gasp for 
breath. Indeed, many of our largest businesses 
of today started on a capital of less than one 
hundred dollars. Nearly all started from small 
beginnings. It is in appraising the human ele¬ 
ment of a credit risk that a salesman can be of 
much assistance to his credit department. He is 
the man on the ground. Consciously or uncon¬ 
sciously he is a student of human nature, and 


20 




THE PRINCIPLES UNDERLYING CREDIT 


usually is a good judge of men. But even the 
best of us are not infallible in gauging human 
nature. It is easy to be influenced by outward 
appearances. 

The Story of the Swedish Rancher 

We are all very much like the salesman in 
William Maxwell’s story of the Swedish cattle 
raiser who wanted to buy some fencing for his 
ranch down in Texas. He had just come to 
Chicago with a train load of cattle, and after dis¬ 
posing of the cattle at the Yards went out to get 
the wire. 

Clad in his cheap blue overalls and a hick¬ 
ory shirt, and strong with the odor of his un¬ 
washed body and the pungent smell of the cattle, 
he made his way to one of the wholesale hard¬ 
ware houses. A salesman “sized” him up. 

“What do you want, old man?” he asked 
patronizingly. 

“I tank I take a little bob wire,” was the 
rancher’s answer. 

“How much do you want, Ole?” 

“Veil, I tank I yust fence everything with 
tree wires. I got ten sections. That make forty 
mile to fence, and tree time forty make hundred 
twenty. I ain’t yust know how many spools of 
wire that make, but I know I want hundred 
twenty miles of wire.” 


21 




WHAT A SALESMAN SHOULD KNOW 


It was only after the cattleman had pro¬ 
duced Clay, Robinson & Company's check for 
ten carload of steers that the salesman who had 
“sized" him up was convinced that he was not 
talking to a crazy person. It cured him forever 
of the “sizing-up" habit. 

It is just as dangerous to judge a man by 
outward appearances in credit matters, as it is 
to “size them up" from a sales point of view. 
You want to back your impressions up with facts. 
Mere opinions count for little in a court of law. 
They count for still less to a credit man who 
knows his business. 


22 




Ill—Getting a “Line” On a New 
Customer 

No matter what policy your house follows 
in requiring credit information on new accounts, 
it is to your interest to see that dependable data 
on each new account accompanies the order. If 
you spend half an hour selling a man, it is cer¬ 
tainly worth five minutes more to make sure that 
there will be no hitch at the credit end. When 
you hear salesmen complain that their credit de¬ 
partment is “dead from the neck up” or that the 
credit man has it “in for him,” you can safely 
figure that the fault is not with the credit de¬ 
partment but with the salesman. 

The credit manager is just as much in¬ 
terested in making sales as you are. He is not 
getting paid for the orders he turns down, but 
for the business he builds up. Credit policy goes 
hand in hand with sales profits. The credit man¬ 
ager wants to help the salesman, if the salesman 
will only let him. But there are some salesmen 
who won't let him. If you don't believe that the 
credit department can help you sell more goods, 
just convince it that you are interested in getting 
dependable credit information and see. 

One of the ablest salesmen I know, now the 
sales manager of a large paint concern, owes his 


23 


WHAT A SALESMAN SHOULD KNOW 


success on the road in no small measure to the 
helping hand held out to him by the credit man¬ 
ager. At any rate, the credit manager soon came 
to look upon him as a valuable assistant. 

As a result of the co-operation this sales¬ 
man received he soon became adept in judging 
credits and it was seldom indeed that the credit 
manager had to question his orders. All the in¬ 
formation needed came attached to the order— 
not the perfunctory sort of information some 
salesmen send to the credit department, informa¬ 
tion which shows on its face that the salesman 
is doing his utmost to “sell” the customer’s credit 
to the credit manager, but information that 
showed a broad knowledge of business and a real 
desire to build business as well as orders. 

What Credit Man Wants to Know 

For instance, instead of merely stating 
“stock $300, outside property $100,” this sales¬ 
man found out something about the dealer’s past 
history; whether he had two or three wagons; 
how old the dealer was (age is an important 
factor in credit); how long he had been in busi¬ 
ness; something about his location and the gen¬ 
eral atmosphere of his store, etc. 

By doing this the salesman gave the credit 
department facts upon which it could base con¬ 
clusions. He did not try to force his own con- 


24 




GETTING A LINE ON A NEW CUSTOMER 


elusions on the credit department. This is an 
important essential to keep in mind in all your 
relations with the credit department. 

Just what sort of facts are most illuminat¬ 
ing to your credit man, depends of course on the 
character of your business. Here are some sug¬ 
gestions taken from various sources: 

What sort of shape is the stock in? 

Is the stock insured against fire? 

Construction of building with view to fire risk. 

Is it a cash or credit business? 

How long has the business been established? 

Has it grown any in the last year? If not, why? 

What books of account does the customer keep? 

What outside interests? How much real estate? 

Is the location good? Is competition keen? 

Does he seem to understand buying? 

Is he well thought of by his local bankers? 

What are his domestic relations? 

Has he ever been in financial difficulty? 

Does he attend to business? 

What sort of fixtures has he? Estimated value? 

What rent does he pay? (Estimated). What payroll? 

Carry employers’ liability insurance. 

Amount of last year’s sales? (Estimated). 

Date of last inventory? How often does he take stock? 

Is customer temperate in his habits? 

By far the most important information 
which a salesman can give his credit department 
is something about the condition of the cus- 


25 




WHAT A SALESMAN SHOULD KNOW 


tomer’s stock. An intelligent statement on that 
point gives the credit man a word picture of the 
customer’s business condition. It is especially 
valuable in passing on small credits. 

If the man has too large a stock for his lo¬ 
cality, it means either that he has bought too 
heavily, or that he has been buying instead of 
selling. In either case he is headed for trouble. 

Likewise, if his stock is in bad condition he 
is obviously not a careful merchant, and will 
eventually have to take a loss—and you can 
never tell how far-reaching such a loss may be. 

Similarly, if he has a lot of “top shelf” mer¬ 
chandise, this fact should be stated in the report. 

Appraising a Customer’s Stock 

Another rather important point to keep in 
mind in sizing up a customer’s stock is from 
whom it is bought. If the bulk of the stock was 
purchased on long billings from concerns who 
are not financially strong and who would not 
be in a position to give the merchant an exten¬ 
sion of time in case of a financial stringency, this 
should be noted. In such a case the merchant’s 
creditors would all demand money at once—with 
the result that your customer would find him¬ 
self in hot water. 

Of course, you could not, as a rule, take time 
to secure information on all these points, for 


26 




GETTING A LINE ON A NEW CUSTOMER 


many of these facts have to be learned through 
outside sources, and you are too busy getting 
orders to turn detective. These points are men¬ 
tioned here merely to suggest to you the sort of 
information that is of value in judging a risk. 
Keep a weather eye open and when you learn 
something don't fail to pass it on to the credit 
department. 

By making it a rule to follow this policy a 
salesman often saves a customer. Many con¬ 
cerns, although financially sound, are not rated 
in Dun's or Bradstreet's. In putting Waxit on 
the market, W. C. Levey, sales manager of the 
company which makes this product, picked up 
many good orders from unrated concerns which 
competitors had overlooked as being poor credit 
risks. 

Owner’s Name Important 

Another important point to keep in mind is 
that of giving the owner's name as well as the 
name of the business when reporting on new 
customers. Carelessness in this respect has re¬ 
sulted in many an order being held up because 
the credit department could find no record of 
the name in the rating books. 

Such names as the Palace Drug Store, The 
Red Cross Pharmacy, the Unique Hardware 
Shop, etc., are usually rated by the credit agen- 


27 




WHAT A SALESMAN SHOULD KNOW 


cies under the name of the individual owner, and 
it will save considerable time and expense if you 
give both the style under which the business is 
conducted, as well as the name of the owner, in 
your report. 

As evidence of the value placed on accurate 
credit information we quote from the recently 
issued Sales Manual of the Federal Electric 
Company, a $7,000,000 corporation: 

“A salesman’s standing with this company 
is judged by the following: 

1. The Total Sales secured and the per¬ 
centage of profit thereon. 

2. Total Expenses incurred in getting busi¬ 
ness. 

3. Value of Credit Information turned in 
and the class of customers secured . 

4. General Efficiency, faithful performance 
of duties and the following of instructions. 


28 




IV—How to Analyze a 
Financial Statement 

A buyer's capital is the sum of his available 
net resources, plus his credit . The giver of credit 
is a contributor of capital, and becomes in a cer¬ 
tain sense a partner of the debtor. As a partner 
he has a partner’s right to complete information 
about the financial status of the business at any 
and all times. This information is usually con¬ 
veyed in the form of what is known as a “finan¬ 
cial” or “property” statement. 

It sometimes falls to the lot of the salesman 
to use his influence to get his customers to send 
in financial statements. Oftentimes a salesman 
resents having to “meddle with credit matters” 
and takes the attitude that such work is entirely 
out of his province. Nothing could be farther 
from the truth. Requesting a statement is not 
a reflection on the customer’s integrity, character 
or business ability, as some salesmen seem to 
think, but is a business accounting that may 
easily do the customer considerable good. 

When a customer makes out a statement he 
is brought face to face with vital figures and 
facts. Statement giving, therefore, tends to 
make a debtor a better buyer for he becomes 


29 


WHAT A SALESMAN SHOULD KNOW 


more familiar with his stock. It causes him to 
give closer heed to his own credits and collec¬ 
tions; it makes him more conservative in incur¬ 
ing debts and gives him a broader knowledge of 
his business generally. 

To the grantor of credit a financial state¬ 
ment conveys facts which paint a fairly complete 
picture of the debt-paying capacity of a business. 
For, strange as it may seem, large assets are not 
always necessary to the creation of credit. The 
credit granted should be in relative proportion 
to the actual assets, and in harmony with the 
conditions which create and maintain it. The 
financial statement reflects these conditions, but 
there are certain points which must be constantly 
kept in mind when considering a financial state¬ 
ment. 

A Standard Financial Statement 

There are numberless different styles and 
forms of financial statements in use, but the 
forms designed and recommended by the Na¬ 
tional Association of Credit Men are becoming 
standard. One of these forms is shown here: 

When called upon to analyze a financial 
statement you see before you such items as real 
property, insurance, annual sales and expenses. 
Unless you know “what is what” you are apt to 


30 




HOW TO ANALYZE A FINANCIAL STATEMENT 


- - — ■■■■■■—.—- — — . ... .... — - — - _ __ _ __ _ . _ IT _ , I 

PROPERTY STATEMENT BLANK 

Recommended and endorsed by the National Association of Credit Men. 

“Large assets are not always necessary to the creation of credit; what is most desirable is, that credit be In relative 
proportion to the actual assets. The giver of credit is a contributor ofcapUal, and becomes, In a certain sense, a partner of the 
debtor, and, as such, has a perfect right to complete information of the debtor's condition at all times." 


To JOHN JONES & Co., New York Date. 191 

For the purpose of obtaining credit for goods to be sold me or us by you, or for any txtension granted me or us on my 
or our account with you. the following is given you as a true statement of my or our assets and liabilities and general financial 
condition. I or we agree to and will notify you immediately !in writing of any materially unfavorable change in my or our 
financial condition, and in the absenae of such notice, or of a new and full written statement, this may be considered as a 
continuing statement and substantially correct. 


BUSINESS ASSETS 

Dollars 

Ceuts 

BUSINESS LIABILITIES 

Dollars 

Cents 

Value of merchandise on hand at cost 






Store Furniture and Fixtures.... . 



Owe for Merchandise nast due. . 



Cash in hand.. 






Cash In bank... 



O a' p PontfQ • 


— 

Accounts good and collectible. 





Notes good and collectible. 



OWP TflYPQ 



Store, Building and Lota.$ .... ) . 



OwP Rprf 



Mortgaged .$ .... \ Equity 



Total Business Liabilities. 

Net Worth In Business... 

Total . 

— 

">j 

Other personal property. 

Total Active Business Assets. 


•.- 


-- 





If any of the above liabilities are secured, state particulars in proper place below 


OUTSIDE ASSETS 

Dollars 

Cents 

Full Giveu and Surname of Each Partner 

Age 

Married 

uAiiurr A*e*oo*» 

tea o« 

Total Real Estate owned. 







Less exempt portions.... 

Total Real Estate not exempt.. 

Encumbrance on Real Estate not exempt_ 

Net Equity In Real Estate not exempt. 

Other Property not exempt. 

Total Outside Property..• 

... . 

_ ... _ 






—. 

--■ .. -- — -. ■■ ■ - ■ ■ — 

Nature of Business... 

Insurance on Merchandise - .$. 



Insurance on Real Estate.$. 



Insurance on Furniture and Fixtures... % . 

Insurance on Other Property.J 



Pa* Rent nn Store Tier month. S 

Debts not enumerated above. 

Net Outside Assets.. 



Commenced Business.Lease Expires. 

Bank with .. 

Net Worth In Business. 



Date of last Inventory.Ever burned out. 

Keen foliowinir Rooks of Ac.diunt 

Total Net Worth In and out of Business. 

— 

— 

Annual Expenses . 


Included In Liabilities In Above Statement: 

Mortgage on Merchandise.$.. Suits pending. 

Mortgage on Furniture and Fixtures. % . Judgments.$ 

Mortgage on Horses and Wagons.$.*.. Judgment Notes.I 

Mortgage on Other Personal Property.....!. Mechanics’ Liens.$ 

What proportion of Sales is on Credit.$. Am't of Sales last yr. . J 

REMARKS—Give details and explanations of questions not fully answered above.. 


If you have pledged or transferred outstanding accounts or property remaining under your 
control, state amount thereof and amount received, or to be received, on account of such 

pledge or transfer...*,..... 

The above statement, both printed aud written, has been carefully read by the undersigned, and Is a full and correct 

statement of my or our financial condition as of.101..... 

Firm Signature . 

Town.State. By.a member of the firm 

On the reverse side of this sheet is given a complete list of houses I or we deal with, and amount owing each one; 
also a description of all Real Estate owned. 

Standard Form D.—This farm was originally adopted by the National Association of Credit Men and Is bore reprinted by their 
courtesy and consent. 


Merchandise Consists of 


Dry Goods.I 

Notions.{ 

Clothing .$ 

Boots and Shoes... $ 
Hats and Caps. ... ! 

Groceries .I 

Crockery. % 

Hardware .I 

..> . $ 

Total .$ 


\ 


Form of Financial Statement Recommended by the National 

Association of Credit Men 

Another popular form is one which is sent through the 
mails without an envelope. The post-mark on the statement 
itself is valuable evidence when proving in court that the 
party making out statement had used United States mails to 

defraud. 


31 





































































































































































WHAT A SALESMAN SHOULD KNOW 


give these undue value. All items on a financial 
statement are useful as an index to the capa¬ 
bility of the management, but one should never 
lose sight of the fact that the only items which 
bear directly on the question “If I sell this man 
will we get our money ?” are the quick assets and 
the quick liabilities. 

Something About “Quick” Assets 

What is a “quick” asset? It is something be¬ 
longing to a business which can be quickly con¬ 
verted into money. 

If a man has ten barrels of sugar in his base¬ 
ment that is a quick asset, because if pressed for 
cash you can take the sugar and sell it at a 
sacrifice within a few hours time. On the other 
hand a man's store fixtures could not be so easily 
sold, in fact it might take several months to find 
a buyer. Consequently store fixtures are a “slow” 
asset because they cannot be turned into cash so 
readily. 

According to a circular issued by National 
Association of Credit Men the quick assets which 
should be given first consideration in analyzing 
a financial statement are as follows: 

Cash in hand 

Cash in bank 

Good Accounts receivable 

Stock on hand at actual market value 


32 




HOW TO ANALYZE A FINANCIAL STATEMENT 


In the same way a “quick” liability is an 
obligation which is due or must be met in the 
near future. According to the same circular, 
the quick liabilities of a business are: 

Amount owed on merchandise due 
Amount owed for merchandise past due 
Amount owed for notes payable, unsecured 
Due individuals on borrowed money 
Due bankers for borrowed money 

Added is the question: 

Have you endorsed notes? 

Segregating the “Doubtful ” Items 

Now, then, let us take up these points one 
at a time. First we come to “Cash in Hand.” 
This represents receipts which have not been de¬ 
posited in the bank at the time of making the 
statement; cash kept on hand for paying express, 
car fare and other small items, and all other un¬ 
deposited cash belonging to the business. 

“Cash in Bank” is the actual bank balance as 
shown by check book. 

“Accounts Receivable.” Not all accounts 
receivable are quick assets, which explains why 
this item was qualified by the word “good.” 
There are always accounts on the books of every 
business which are questionable. Some are ab¬ 
solutely worthless. The doubtful accounts must 
be deducted and entered separately under 
“doubtful accounts.” If the statement contains 
33 




WHAT A SALESMAN SHOULD KNOW 


no such entry it is wise to question the buyer on 
that point, or else write off a percentage of the 
item “Accounts Receivable” to cover bad debts. 
The percentage of bad debts varies in different 
kinds of businesses and according to the care ex¬ 
ercised by the management in granting credit. 
The general average is between one and two per 
cent. 

How Financial Statements are Padded 

Some business men deliberately pad a 
financial statement by including with bills re¬ 
ceivable loans to partners or to corporation of¬ 
ficers. In many cases such loans are not quick 
assets for the reason that in case of liquidation 
(winding the business up) these partners or of¬ 
ficers often do not have the money to repay the 
loans. Items of this kind should be shown sepa¬ 
rately. 

Another point to watch out for in this con¬ 
nection is whether or not the item “accounts re¬ 
ceivable” represents merchandise which has 
actually been sold and delivered . 

“Notes Receivable” are notes signed by 
financially responsible parties or corporations. 
This item must not include notes that are in any 
way questionable. If a customer is holding notes 
of any great amount, and his statement shows a 
cash shortage, it might be well to make a guarded 


34 




HOW TO ANALYZE A FINANCIAL STATEMENT 


inquiry as to the worth of the notes. Most banks 
will usually advance money on notes of good 
signature, and a business man in need of cash 
usually “discounts” these notes to get the cash. 
The fact that he is holding them, while short of 
ready cash, looks suspicious. Couldn't he get 
anybody to take them off his hands ? What is the 
matter with the notes ? 

How Old is the Inventory? 

“Stock on Hand” is usually a very important 
item in most mercantile financial statements, 
and it is here you have to keep a double look-out. 
If this item is not based on a recent and accurate 
inventory the whole statement is of practically 
no value from a credit standpoint. If it is esti¬ 
mated, or if it is based on an old inventory, it is 
pure guesswork. There are still some merchants 
who make no effort to keep stock accounts. Their 
idea of an inventory is to walk through the store 
and “size up” the value of merchandise on each 
shelf, or in each drawer. 

Most progressive merchants, however, keep 
books of accounts and take careful and correct 
inventories at intervals of not longer than twelve 
months. 

It is distinctly specified by the National As¬ 
sociation of Credit Men that all stock must be 
shown at actual market value. What is actual 


35 




WHAT A SALESMAN SHOULD KNOW 


market value? It is not always what the mer¬ 
chant paid for the goods, nor is it what he thinks 
they are worth. Merchandise should be given at 
actual cost only when fresh and salable. If out- 
of-date or shop-worn, a discount should be taken 
from the cost price. If the market has gone 
down since the goods were purchased due allow¬ 
ance should be made. Except in cases of a gen¬ 
eral drop in prices, however, this last caution 
may be disregarded, for the loss so suffered is 
usually offset by the advance in value of other 
stocks. 

Something About “Quick” Liabilities 

Having disposed of the quick assets, we now 
come to the quick liabilities. What is there we 
should know about these? The first item: 
“Amount owed for merchandise not due” is 
largely self-explanatory. A man buys a bill of 
goods on thirty day billing. He agrees to pay 
for it thirty days after it is billed. It is not due 
until then, consequently it is not as pressing an 
obligation as what a man owes on merchandise, 
the bills for which are due, but still unpaid. For 
that reason the two items are usually separated 
on the financial statement. If they are not, they 
should be. A customer who shows a consider¬ 
able amount of money owing on past due mer¬ 
chandise bills is not as desirable a risk as one 


36 




HOW TO ANALYZE A FINANCIAL STATEMENT 


who shows by his statement that he pays all bills 
as they come due. The other items explain them¬ 
selves. 


Applying the “Factor of Safety” 

After analyzing the statement in the light 
of the above suggestions it is well, as an extra 
precaution, to depreciate book accounts (ac¬ 
counts receivable) from 25 to 33 y 3 per cent, and 
to write off as dead assets such items as store 
and office furniture and fixtures, and equity in 
mortgaged property that is not already exempt 
under state laws. This extra precaution is what 
a banker calls a “factor of safety” and it is based 
on the well-known truth that “assets shrink but 
liabilities never.” 

To arrive at a decision regarding the custom¬ 
er's solvency, a good formula to use, and one 
which is recommended by R. E. Neuse of Francis 
H. Leggett & Co., in his report to the National 
Wholesale Grocers Association, is: “Two dol¬ 
lars of liquid assets to every dollar of indebted¬ 
ness.” This means that a statement which fails 
to show more than twice as much quick assets as 
liabilities indicates a poor risk, the higher the 
ratio of assets to liabilities in excess of two to 
one, the better the risk. 


37 




WHAT A SALESMAN SHOULD KNOW 


Salesmen selling the dealer will be interested 
in the following tabulation of failures published 
through courtesy of R. G. Dun & Company. The 
figures show how many “traders” have failed 
during the last four years, and what lines of 
business have suffered: 



1917 

1916 

1915 

1914 

General Stores. 

. 975 

1,391 

2,334 

1,789 

Groceries, Meat and Fish.... 

.3,129 

3,599 

3,614 

3,022 

Hotels and Restaurants. 

. 530 

650 

767 

634 

Liquors and Tobacco. 

. 732 

936 

1,286 

958 

Clothing and Furnishing.... 

. 836 

1,089 

1,747 

1,558 

Dry Goods and Carpets. 

. 478 

712 

1,179 

916 

Shoes, Rubbers and Trunks.. 

. 229 

376 

568 

453 

Furniture and Crockery. 

. 249 

287 

497 

354 

Hardware, Stoves and Tools. 

. 208 

349 

491 

351 

Chemicals and Drugs. 

. 362 

490 

631 

509 

Paints and Oils. 

63 

54 

78 

62 

Jewelry and Clocks. 

. 222 

293 

494 

393 

Books and Papers. 

51 

99 

123 

102 

Hats, Furs and Gloves. 

37 

51 

118 

123 

All Other. 

.1,329 

1,547 

2,103 

1,627 

Total Trading. 

.9,430 

11,923 

16,030 

12,851 


These figures emphasize the importance of 
every salesman keeping a keen look-out to make 
sure that none of the failures which will occur 
this year result in a loss to his house. A hundred 
dollar credit loss eats up the profit on many 
hundreds of dollars worth of business. 


38 






















V—References—Good, Bad and 
Indifferent 

Some years ago when the writer was on the 
road he remembers standing in a small town 
grocery waiting for a salesman representing a 
well-known wholesale grocery house to get 
through with his solicitation. The salesman 
passed the book over to my customer to sign: 

“Now, Mr. Smith,” he said, “I wonder if you 
would give me the names of a few houses who 
have dealings with you so I can put them down 
on my credit report. Of course, I know you, and 
I know that you are as good as your bond, but 
our house has a new idea about making us get 
references from every new man we sell. To keep 
them happy I have to send a sort of a credit re¬ 
port with each order from a new customer. They 
probably will never even read the report after 
they get it, but if you can slip me something for 
the report I would appreciate it.” 

“What sort of reference do you want?” the 
merchant asked. “I bank with the First Na¬ 
tional Bank. Mr. Kennedy, the president, will be 
glad to give you all the information you want 
about me. Then there's Mr. Smith— 

“Don't misunderstand me,” the salesman 
broke in, “I haven't the slightest doubt as to your 
ability to pay for everything you buy. It's just a 


39 


WHAT A SALESMAN SHOULD KNOW 


rule of the house, that's all. What I would really 
like would be the names of, say, three concerns 
you do business with-—you know, concerns that 
would be glad to say a good word for you if they 
were asked." 

Can you conceive of any worse way to get 
references than this? In the first place such 
references are worse than useless. Any sales¬ 
man who would send such names in would be 
unfair to his house, unfair to his customer, and 
unfair to himself. Indeed, it is little short of 
dishonesty. In the second place, it was poor 
salesmanship. The salesman antagonized the 
customer by his inquisitive questioning, and stood 
a good chance of losing the order altogether. 
Moreover, he lowered himself and his house in 
the estimation of that customer. 

How One Salesman Gets References 

In contrast with this handling of the situ¬ 
ation, notice how a salesman who knows his busi¬ 
ness goes about getting the names of references. 
The last thing he would ever do would be to 
bluntly ask a customer for them. He knows only 
too well that no customer is going to give him 
the names of concerns or persons who would 
report unfavorably. Therefore, the wise sales¬ 
man depends on his eyes to get the names he 
wishes. A can of peas packed by a friendly job- 


40 




REFERENCES—GOOD, BAD AND INDIFFERENT 


bing house which he observes on the dealer's 
shelf informs him that the dealer does business 
with this concern. On other shelves he sees evi¬ 
dence of more purchases from this same house. 
What he sees leads him to the conclusion that the 
dealer's account with this house must be large 
and he makes a mental note of the name. 

What a Close Observer Sees 

During the interview the merchant takes him 
over to his desk. There he notices a slip of in¬ 
voices from one of the biscuit companies. Some 
of them look rather old. The question suggests 
itself that here is a good lead for a reference. 
The salesman knows from long experience that a 
great many merchants will keep certain accounts 
paid up in order to have them for reference use, 
but he will let others lag. Keep your eyes open. 

While the buyer is waiting on a customer the 
salesman gets an opportunity to take note of the 
dealer's stock. His credit training enables him to 
differentiate between those items which are sold 
by concerns with loose credit requirements, and 
those sold by concerns that are very conservative 
in granting credit. He notes this. Over in one 
corner of the store is a pile of incoming mer¬ 
chandise from a concern with which he knows his 
house to be on most friendly terms—he can't help 


41 




WHAT A SALESMAN SHOULD KNOW 


but see the label showing the name of shipper— 
and he makes a note of that name. 

In time the salesman finishes with his cus¬ 
tomer and goes over to the station to wait for his 
train. While waiting he meets the express agent. 
After passing the usual comments on the 
weather, the salesman casually inquires regard¬ 
ing the general state of business. Finally he 
gets around to the particular merchant in whose 
credit affairs he is interested. A few well-chosen 
questions bring to light the fact that the mer¬ 
chant gets quite a lot of shipments from a cer¬ 
tain Chicago wholesale house. The salesman has 
another reference. 

References You Can Bank On 

References of this sort are dependable. It 
is a safe bet that if there is anything wrong with 
the account it will come to light when you begin 
to get information from such references. To il¬ 
lustrate the value of references of this kind, a 
Chicago mail order diamond house does a credit 
business of over $1,000,000 a year, mostly with 
small town people. This concern sends out 
thousands of dollars’ worth of diamonds to peo¬ 
ple it has never heard of, with a loss of but a 
fraction of one per cent through bad debts. The 
methods used to get a line on these mail order 
buyers were described to the writer by S. T. A. 
Loftis, the president of the concern: 

42 




REFERENCES—GOOD, BAD AND INDIFFERENT 


“We figure,” said Mr. Loftis, “that the refer¬ 
ences a customer gives us are fixed. He will in¬ 
variably drop in and mention to some of his 
friends that he has bought a diamond and given 
them as reference. Our only reason for asking 
for references direct is to keep away the totally 
irresponsible. Our real test is to send out a let¬ 
ter to several local merchants, asking the mer¬ 
chant as a business courtesy, to give us the names 
of several people with whom our customer has 
had business dealings. In this way we invariably 
get several good references, and it is very sel¬ 
dom, indeed, that we make a mistake.” 

It seldom falls to the salesman to have to 
look up the references after he has them, as 
he is relieved of this work by the credit depart¬ 
ment. The credit department has ways of doing 
this through rating agencies and by means ot 
credit exchange bureaus. The salesman's job is 
to see that the references are of the kind that 
will enable the credit department to get an accu¬ 
rate and dependable report on the customer. It 
is as much to your advantage as the credit de¬ 
partment's that you take pains to get the names 
of the right kind of references. 


43 




VI—Keeping Tab on Old 
Customers 

In spite of outward appearances to the con¬ 
trary, few men stand still in business. They 
either go ahead or go back. In either case it is 
to your interest to note the evidence of each for¬ 
ward or backward step. 

As a salesman you are mainly interested, of 
course, in whether or not a customer is making 
good. This you will observe from the general 
appearance of his store, from casual remarks 
made by the customer in his conversation with 
you, or from stray bits of information you pick 
up at the hotel and about town. It may be that 
he has bought a new automobile, a new home, or 
possibly a farm. These are all signs that point 
to more business for you. Previous to this, the 
house, acting on your suggestions perhaps, or on 
information secured through regular credit 
sources, has held his credit down pretty low both 
as to time and amount. Now he is entitled to 
more credit. And you are justified in selling him 
all he will buy, and making him a 100 per cent 
customer. 

But unfortunately not all men who start in 
business go forward. On the contrary, the great 
majority fail, and it is to the salesman's interests 
to keep a vigilant look-out for the warnings that 


44 


KEEPING TAB ON OLD CUSTOMERS 


tell him a customer is going the downward path. 

It takes a lot of courage to suggest to the 
office that it might be well to investigate a cus¬ 
tomer's finances with a view to restricting his 
credit, but it is the right thing to do, and in the 
last analysis is to your own best interests. The 
records of all large businesses show that the 
salesmen making the greatest amount of money 
are the men who show the fewest losses among 
their accounts. 

Signs that Signal <( Slow Down " 

The signs of retrogression are too well 
known to an experienced salesman to require 
much comment here. The office observes them 
in the merchant's falling behind in payments, a 
failing to take discounts, in irregular payments, 
in paying on account, or in checks returned from 
the bank marked “no funds." But these indica¬ 
tions, while evidence of poor management and 
a signal to “slow down," are not in themselves 
conclusive. A customer may have invested heav¬ 
ily in bonds, or in real estate, and for the time 
being put himself in a tight place financially. 
Or he may be doing too much business for his 
capital. In such cases, it is not always advisable 
to shut off a man's credit, at least not until after 
you have looked into the matter with some care. 

In 1907, during the money stringency, it was 


45 




WHAT A SALESMAN SHOULD KNOW 


reported by the credit agencies that a big New 
York department store was in a tight place. Im¬ 
mediately those manufacturers who had been 
selling the store began to apply the brakes. The 
more cautious refused point blank to give an¬ 
other cent's worth of business. But there was 
one corset manufacturer who refused to be 
stampeded by the report and asked the sales¬ 
man on the territory to look into the matter be¬ 
fore taking any summary action. 

When a Good Reputation Pays 

It so happened that this particular salesman 
was of the type that believed in representing his 
house first, and selling goods secondly. Times 
without number he had shown his whole-hearted 
interest in the general welfare of the business by 
sending in tips, which in several cases had en¬ 
abled the firm to avoid a loss. So the credit de¬ 
partment felt safe in putting the whole matter 
up to the salesman and leaving it for him to de¬ 
cide whether or not the account should be closed 
out. 

The salesman got on the job at once, and 
after doing some clever “gum shoe" work learned 
that the store in question had plenty of money, 
but that it was tied up in the construction of 
some new buildings. With this information in 


46 




KEEPING TAB ON OLD CUSTOMERS 


his pocket the salesman went to the manager of 
the store and said: 

“I know that other corset manufacturers 
have shut down on you. I have also found out 
that you've got money, but that it is tied up. 
We'll sell you all the merchandise you want and 
give you an extension of time, but you will have 
to pay interest." 

Being on the Ground Helped Here 

The proposal met with the approval of the 
manager, and the salesman came away with a 
large order. In time he was able to get the store 
around to a point where his was the only line of 
corsets the store sold. Since then this salesman 
has sold this customer goods amounting to up¬ 
wards of $250,000 and has never lost a cent! 
Could you ask for any better illustration of the 
value of working closely with the credit depart¬ 
ment than this? The other corset concerns 
whose salesmen could not be relied upon to se¬ 
cure accurate credit information accepted the 
report of the mercantile agency without further 
investigation and lost a customer. The concern 
where the credit department worked hand in 
hand with the salesmen, not only retained a cus¬ 
tomer but placed itself in a position to get the 
entire corset business of that store. 


47 




WHAT A SALESMAN SHOULD KNOW 


It pays a salesman to get what one sales 
manager calls “the president's viewpoint" and 
see all sides of the business. It pays to keep close 
tab on your customers, reporting the unfavor¬ 
able as well as the favorable. Here are some 
suggestions, taken from the experience of many 
concerns which may help you in keeping tab on 
your customers: 

1. Are there any indications that a customer 
has been buying heavily of one house? If so the 
matter should be promptly called to the attention 
of the Home Office and all possible facts relating 
to the matter reported. 

2. Has the customer secured some house by 
the personal guarantee of some relative? 

3. Are there any indications that customer is 
letting his business run down—that is, allowing his 
stocks to deteriorate, buying slow moving stocks, 
neglecting his business, or scattering his trade? 

4. Is the customer becoming loose in his per¬ 
sonal habits? Is he living extravagantly, drinking, 
indifferent in handling customers? 

5. Is there any evidence that he is getting 
ready to sell out, or closing out with the intent of 
quitting business? 

6. Have any of his accounts with other credi¬ 
tors been placed in attorney’s hands for collection? 

7. Has customer given mortgage on real- 
estate or other personal property, or done anything 
that would indicate a financial weakening? 


48 




KEEPING TAB ON OLD CUSTOMERS 


There are, of course, many other points 
which serve as credit indicators which you should 
watch out for in going about from customer to 
customer, but these will serve as a basis upon 
which to build. A salesman comes in contact 
with many facts of great credit significance, 
sometimes in conversation with the buyers them¬ 
selves, but more often through talks with other 
salesmen and disinterested parties. These facts 
should be promptly reported. Oftentimes some 
fact which seems trivial to you, in the light of in¬ 
formation known to the office, will prove a most 
valuable side light on a buyer's financial status. 

By reporting what you hear and see you win 
the good-will of the officials of your company and 
establish yourself in their estimation as a man 
who can be depended upon. When the time 
comes to fill the positions “higher-up" it is al¬ 
ways the dependable man who gets first consid¬ 
eration. 


49 




VII—Credit Safeguards 

As a rule, it does not pay a salesman to 
waste time and effort on buyers of questionable 
credit standing. It is a generally conceded prin¬ 
ciple of selling that a merchant who pays his 
bills quickly and regularly can be sold more fre¬ 
quently than one who requires longer terms. It 
is also true that a customer of strong credit 
standing offers a greater potential outlet, be¬ 
cause you can sell him all he can buy. Then, of 
course, the element of risk is materially lessened. 

There are times, however, when it is policy 
to deviate from this rule. In introducing a new 
product a salesman quite often finds it advisable 
to go to unrated concerns. Such concerns have 
generally been passed up by a competitor, and 
they offer him the line of least resistance in get¬ 
ting a toe-hold on the market. Or it may seem 
like good strategy to a salesman to sell certain 
buyers who look like “comers” even though their 
present credit standing it not of the best. 

Under such conditions what is a salesman to 
do? As the sale will, of course, be for a small 
amount, a careful investigation on the part of 
the salesman will often warrant taking a chance 
on the account. In spite of the fact that Runkle 
Brothers sell many thousands of small dealers 
who are not rated in Dun’s or Bradstreet’s, the 


50 


CREDIT SAFEGUARDS 


total losses from bad debts of that company 
amount to less than one-tenth of one per cent a 
year. This fine showing is due to the policy of 
this concern in depending largely on the sales¬ 
men for investigating credits. It is their con¬ 
tention that the salesman is not an order getter 
but a business getter—and to be a business getter 
the salesman must remember that a sale is not 
made until a profit has been deposited in the 
bank. 

If there is any doubt as to the ability of the 
concern to pay, and it still seems advantageous 
to get your merchandise in, it may be well to 
either get him to agree to have the goods sent 
C. 0. D. or to get someone to guarantee the 
credit. The following form of credit guaranty 
was drawn up by the National Wholesale Groc¬ 
ers Association, and will serve as an outline for 
a similar form in any line: 

Credit Guaranty 

In consideration of JOHN JONES & CO., extending or 

continuing credit to. 

of.for groceries, provisions and 

other merchandise, the amount and extent of such credit, 
however, being at all times in the discretion of John Jones 
& Co., the undersigned hereby guarantees to said John Jones 
& Co., its successors or assigns, the payment of any and all 
such purchases heretofore or hereafter made, with interest 
thereon from maturity and all expenses of collection, including 
attorney’s fees. 


51 






WHAT A SALESMAN SHOULD KNOW 


The liability of the undersigned hereunder is limited to 

.dollars, but John Jones & Co. may exceed 

that limit of credit at its own risk without releasing the under¬ 
signed from liability hereunder. 

This guaranty shall continue in force until written notice 

of revocation is received by John Jones & Co., at. 

Address 

The undersigned hereby waives notice of acceptance of this 
guaranty and notice of any and all maturities and defaults, 
and agrees that no indulgence, forbearance or extension 
granted the debtor shall effect any release from liability 
hereunder. 

This guaranty shall be directly enforcible against the 
undersigned and with or without any attempt first to collect 
from the principal debtor, and all provisions hereof shall be 
binding on the heirs, executors, administrators or assigns of 
the undersigned. 

Dated.this....day of 

., 19.... Signed and sealed in the pres¬ 
ence of: 

.Signature of... 

Guarantor. Seal. 

. Address . 

Witnesses. 


52 













VIII—Some Legal Phases of 
Credit 

The subject of credit has given rise to a 
great many interesting points of law. Penal 
laws, postal laws, and other statutes as well as 
decisions in the courts have all dealt with ques¬ 
tions arising from the credit relations between 
sellers and buyers. 

False Statements to Obtain Credit . To pre¬ 
vent the obtaining of credit by means of false 
statements as to one’s financial condition, the 
New York Legislature in 1912 enacted a law on 
the subject carrying heavy penalties. This law 
provides that any person who shall knowingly 
make any false statement in writing, with intent 
that it shall be relied upon, respecting the finan¬ 
cial condition of himself or any concern in which 
he is interested, for the purpose of procuring 
property on credit, the extension of credit or 
the discount or indorsement of a bill of ex¬ 
change or promissory note, is guilty of a misde¬ 
meanor and punishable by imprisonment for not 
more than one year or by a fine of not more than 
one thousand dollars, or both fine and imprison¬ 
ment. The act also covers cases where one re¬ 
ceives the benefit of credit, knowing that such a 
false statement has been made by another per¬ 
son, and also cases where one falsely represents, 


53 


WHAT A SALESMAN SHOULD KNOW 


either orally or in writing, that a written state¬ 
ment made on a former day is still true when in 
fact said statement, if then made, would be false. 

Similar statutes have been passed in other 
states. In an Illinois case a member of a firm 
was convicted under such a statute of obtaining 
credit from a bank by means of a fraudulent 
statement in writing of the financial condition of 
the firm whereby the bank had been defrauded. 

In another case, a member of a firm made 
certain representations to a commercial agency 
for the purpose of securing a high rating and in¬ 
ducing credit. He was held liable for damages 
for fraud and deceit where persons were induced 
to sell goods to the firm in reliance upon such 
rating, although the sellers never saw such state¬ 
ments themselves. 

It has also been held that if an officer or di¬ 
rector of a corporation obtains credit for the 
company by fraudulently misrepresenting its 
financial condition, he may be held liable for the 
indebtedness. 

False Statements—United States Mail . The 
United States statutes prohibit the use of the 
mails in furtherance of a scheme to defraud. It 
has been said that the sending of a false financial 
statement by mail to a mercantile agency in re- 


64 




SOME LEGAL PHASES OP CREDIT 


sponse to a request for a statement of the send¬ 
er's financial condition, with the intent of thereby 
receiving credit from merchants, constitutes a 
scheme to defraud and therefore is prohibited by 
the statute. 

In a somewhat similar case fourteen defend¬ 
ants were convicted of using the postoffice estab¬ 
lishment of the United States for fraudulent 
purposes. Each of the defendants represented 
himself as a dealer in various kinds of merchan¬ 
dise and each would certify as to the financial 
responsibility of the others. In this particular 
way they all obtained merchandise from various 
parties having had no intention of paying for the 
same. 

Real Estate in Name of Another — Fraud. 
Another interesting doctrine is that where one 
permits title of real property to stand in an¬ 
other's name and the latter, by reason of having 
such property is able to obtain credit, the real 
owner cannot prevent the creditors from pro¬ 
ceeding against the property to secure payment. 

Liability of Commercial Agencies—False 
Report. In a New York case the question of the 
liability of commercial agencies was considered 
and passed upon. It seems that the plaintiff M. 
had entered into the usual contract with the com¬ 
mercial agency to receive a copy of its book of 


55 




WHAT A SALESMAN SHOULD KNOW 


ratings and to be furnished with reports from 
time to time. M., who resided in Chicago, com¬ 
municated with the Chicago representative of 
the agency and was informed that the Chicago 
office had no report on file as to J. & S., but that 
they would wire New York to get an investigation 
of the firm. M. was later informed that the Chi¬ 
cago office had received a telegraphic report from 
New York that “their man” had called on them. 
This report, which purported to show the assets 
and liabilities of J. & S., was read to the plaintiff 
over the telephone and he was informed that the 
representative of the agency had called on J. & S. 
and had received the information and in effect 
had been assured that the credit of J. & S. was 
good for the purchase price of goods proposed to 
be sold. M. thereupon extended credit to J. & S. 
Shortly thereafter bankruptcy proceedings were 
commenced by creditors of J. & S. 

The court held that the agency was guilty 
of a breach of contract by gross negligence 
amounting in effect to fraud in representing that 
it had obtained a special report at the time the 
information was requested, whereas the evidence 
showed that no information had been obtained 
from J. & S. by the agency except a statement 
obtained about six months previously. 


56 




SOME LEGAL PHASES OF CREDIT 


M.’s contract with the agency was so worded 
as to relieve the latter from liability for loss or 
injury caused by “neglect” or other act in pro¬ 
curing and communicating information to its 
subscribers. The court, however, held that the 
contract should be given a reasonable construc¬ 
tion and that the agency should be released from 
liability for errors and mistakes only and not 
from knowingly making false reports or from 
gross mistakes or negligence by which reports 
are made which are wholly false with respect to 
the action taken by the agency on a request by a 
subscriber for a special report. The court held 
that the evidence would justify a finding of gross 
negligence and also that the agency was guilty of 
constructive fraud in misrepresenting the finan¬ 
cial credit of J. & S., thereby leading, if not in¬ 
ducing, M. to extend credit. 

Two judges dissented from the decision and 
pointed out that the only mistake that was made 
by the agency was in not stating in the telegram 
that the statement was based on information re¬ 
ceived in March instead of at the time the state¬ 
ment was furnished and that such mistake was 
clearly covered in the contract between the 
agency and the subscriber. In the opinion of the 
dissenting judges, the evidence showed no false 
statement and no misrepresentation. They said 


67 




WHAT A SALESMAN SHOULD KNOW 


that in order to charge the agency with such 
negligence as “in effect amounts to a fraud” there 
must be some elements of fraud from which it 
can be inferred that the agency through one of 
its responsible officers intended to deceive; not a 
mere insufficient report which, although it con¬ 
veyed false information, was based upon the 
mistake of the agency's agents with no intention 
to deceive. 

Guarding Against Fraud 
If you have a suspicion that a customer is 
tricky or needs watching, it is generally best to 
have him mail his financial statement in to the 
credit department direct, advising the credit de¬ 
partment of what you are doing at the time. The 
credit department will then watch out for the 
statement and when it is received have the envel¬ 
ope properly witnessed, so that, should your 
fears be justified and it is later found necessary 
to take action against the trickster under the 
postal laws, the statement and envelope will be 
available as evidence. 

Many of the larger concerns, and the 
smaller as well, for that matter, make it a gen¬ 
eral rule to have the envelope in which financial 
statements are received so witnessed, even with¬ 
out a tip from the salesman. 

(Reprinted from a Bulletin issued by the National Wholesale Grocers 
Association) 

58 




IX—Short Term Sales and the 
Salesman 

Selling goods is like playing billiards—the 
beginner thinks only of the shot he is about to 
make. The experienced player thinks two and 
even four shots ahead. Billiard players who can 
think only in terms of one shot do not get very 
far. Neither do salesmen who think only in 
terms of one order. 

There are salesmen, who, thinking that they 
are doing their customer a favor, go the limit in 
extending terms. They little realize that in doing 
so they are lessening their chances for future 
orders, needlessly tying up the capital of their 
house, and worse of all, in many cases doing the 
customer a positive harm. It is the realization 
of this fact, together with the general tighten¬ 
ing up of credits all over the country, that is 
causing so many concerns to say in effect: 
“Here we are turning ourselves into a banking 
house. Let’s get out of the banking business be¬ 
fore a financial hurricane comes along, and sell 
our goods on their own merits.” 

Not so very long ago over half the business 
done by the Ingersoll-Rand Company, makers 
of mining machinery and tools, stretched out 
over a period of 60 to 90 days. Today practically 


59 


WHAT A SALESMAN SHOULD KNOW 


the entire business is on a 30-day basis. When 
the management decided to remedy this situ¬ 
ation they met with some opposition from the 
salesmen, who were quite positive that to at¬ 
tempt to shorten terms would paralyze sales. 
The management, however, was insistent, and 
it wasn't long before the salesmen saw the wis¬ 
dom of the management's policy. Today the 
salesmen of this company are able to devote all 
their time to selling the goods on its merits; they 
are making cleaner and better sales, and selling 
more than they ever sold before. 

Soft-Spined Salesmanship 

A very large percentage of goods sold on 
long terms are a result of soft-spined salesman¬ 
ship. New salesmen particularly are prone to 
countenance unnecessarily long terms, thinking 
that by doing so they stand a better chance to 
get the order. As a matter of fact, there are very 
few men, who if properly sold, will not find a 
way to pay for what they buy within thirty days. 
All the salesman needs to do is to be sure his 
prospect is well sold and to take a firm stand. 

Illustrating what a little firmness in credit 
matters will do, a new Ingersoll-Rand salesman, 
when this company's short-term campaign went 
into effect, sent in an order for an air compres¬ 
sor subject to 90 days billing. When the order 


60 




SHORT-TERM SALES AND THE SALESMAN 

came in the branch manager at once became sus¬ 
picious. He looked up the customer's credit. It 
was Al. Could it be that the buyer was in some 
sort of a financial tangle which necessitated such 
terms? He decided to investigate. 

Getting the manager of the company giving 
the order on the phone, he said: “I noticed 
the compressor order which you have given us, 
and I couldn't help but wonder why a concern 
of your sound financial status would want such 
long terms." 

“Why, your salesman offered them to me as 
a special inducement. If you people are so hard 
up for business that you have to play the banker 
for your customers, that is your loss and my 
gain." 

Do Only New Men Make this Break? 

“That salesman is a new man on the job," 
hastily explained the manager. “He had no 
authority to extend such terms. Of course, an 
order is an order, and if you insist we will have 
to put it through, but it is contrary to our policy 
to take orders on longer terms than 30 days and 
with your permission I will put your order 
through in the usual way." 

This was agreeable to the buyer, who, as a 
matter of fact, could have easily paid cash with 
order, had it been necessary. 


61 




WHAT A SALESMAN SHOULD KNOW 


This whole case was purely an example of 
weak-kneed salesmanship; a kind of salesman¬ 
ship that only a new man would have been guilty 
of. But it shows how easy it is for a salesman 
to make too liberal terms. Such tactics are not 
only a reflection on your salesmanship, but what 
is worse, have a bad reaction on your customer. 
They give him the impression that you have to 
stoop to such practices to get the business, and at 
once arouse his suspicions. 

What Credit Statistics Show 

Credit statistics show that most of the credit 
losses are from customers who have fallen into 
the habit of buying on long billings. It is so 
easy for a customer to say to himself: “Well, I 
won't have to pay for it for two months, and by 
that time I will have a lot of money on hand.” 
This sounds plausible, but what happens? This 
“pay as you go” policy soon fills the merchant’s 
top shelves with sluggish stocks. Slowly, but 
surely, his cash capital dwindles, and his liabil¬ 
ities begin to eat up his “quick” assets. Then 
comes the inevitable crash. It is a story known 
only too well to every salesman. 

A salesman owes it to himself, if not his 
customer, to use every means within his power 
to get his customer to only buy what he can easily 
pay for, and to pay for it is quickly as he can. 


62 




SHORT-TERM SALES AND THE SALESMAN 


The better pay a customer is, the more you 
can sell him. 

A merchant who buys a bill of goods 
amounting to $30, for example, and pays for it 
in sixty days, can be sold on the average only six 
times a year. If that dealer pays for his order 
in thirty days it gives the salesman a chance to 
sell him just twice as many times a year. Every 
salesman knows the advantage of this. It is, 
therefore, apparent that the salesman who knows 
how to separate the slow-paying accounts from 
the quick-paying ones, stands just that much 
more of a chance to finish the year with a larger 
showing. 

When Good Credit is Capital 

Another important point, although it may 
seem a trivial one, is the need of impressing on 
your customers the importance of meeting their 
obligations promptly. A buyer who has his own 
best interests at heart will quickly realize that 
his most valuable possession, next to his cash 
assets, is a sound, substantial and unquestioned 
reputation as a credit risk. Credit is capital. 
To be careless and lax in meeting credit obliga¬ 
tions materially hurts credit standing. The 
many agencies at work today, such as local credit 
exchanges, and other co-operative credit organ- 


63 




WHAT A SALESMAN SHOULD KNOW 


izations, make a man’s business methods an open 
book. 

In a business where thousands of dollars are 
outstanding, the matter of delay in getting 
money in, becomes serious. When goods are sold, 
as they are today, on such a close margin of 
profit, the carelessness of customers in taking 
discounts that have not been earned cuts the 
small profit down still smaller. This is shown 
by the following table: 

30 DAY GOODS 

1% in 10 days is equivalent to 18% interest per 
annum for unexpired time 
1% in 12 days is equivalent to 20% interest per 
annum for unexpired time 
1% in 15 days is equivalent to 24% interest per 
annum for unexpired time 
1% in 18 days is equivalent to 30% interest per 
annum for unexpired time 
1% in 20 days is equivalent to 36% interest per 
annum for unexpired time 
1% in 22 days is equivalent to 45% interest per 
annum for unexpired time 
1% in 25 days is equivalent to 72% interest per 
annum for unexpired time 
60 DAY GOODS 

2% in 10 days is equivalent to 14.40% interest per 
annum for unexpired time 
2% in 12 days is equivalent to 15% interest per 
annum for unexpired time 
2% in 15 days is equivalent to 16% interest per 
annum for unexpired time 


04 




SHORT-TERM SALES AND THE SALESMAN 


2% in 18 days is equivalent to 17.14% interest per 
annum for unexpired time 
2% in 20 days is equivalent to 18% interest per 
annum for unexpired time 
2% In 22 days is equivalent to 19% interest per 
annum for unexplred time 
2% In 25 days Is equivalent to 20.57% Interest per 
annum for unexpired time 
2% in 27 days is equivalent to 21.84% Interest per 
annum for unexpired time 
2% in 30 days is equivalent to 24% Interest per 
annum for unexpired time 
2% in 35 days is equivalent to 28.80% interest per 
annum for unexpired time 
2% in 40 days is equivalent to 36% Interest per 
annum for unexpired time 
2% In 45 days is equivalent to 48% Interest per 
annum for unexplred time 

When your customer' opens an account with 
your house, there is an implied promise to ac¬ 
quiesce in the policy of the house. The question 
of payment of interest, for instance, on accounts 
overdue is not a matter of academic discussion. 
Whether right or wrong as a matter of ethics, it 
is recognized by law and commercial usage, and 
there is no excuse for controversy over it. A 
seller's terms of cash discounts should always 
be strictly observed when anticipating payment. 
No customer has a right to deduct discount in 
excess of what a seller's terms allow, any more 
than he has a right to deduct from the price 
agreed upon. 


65 




X—Something About Trade 
Acceptances 

It has been estimated that in this country 
something like four billion dollars are normally 
tied up in dead “ppen” accounts. To release this 
large sum of money, and counteract in some 
measure the vast sums that have been withdrawn 
for war needs, the Federal Reserve Board recom¬ 
mends the use of a form of draft called “Trade 
Acceptance.” 

Every salesman is vitally interested in doing 
all he can to bring about a more general use of 
the Trade Acceptance. For the first time in our 
business history this country has a banking sys¬ 
tem. Its purpose is to do away with financial 
panics. It cannot do this, however, unless every 
business man, large and small, harmonizes his 
business and banking methods with those of the 
federal system. 

In the past most financial panics have been 
brought about through lack of a non-liquid credit 
system. Your house, we will suppose, has thou¬ 
sands of dollars tied up in open book accounts. 
Money becomes tight. The banks begin to call 
in their loans. What happens? Without suffi¬ 
cient ready cash your house cannot meet the de¬ 
mand, and the inevitable happens. Your firm 
must close its doors. You are out of a job at a 


66 


SOMETHING ABOUT TRADE ACCEPTANCES 


time when jobs are about as scarce as the pro¬ 
verbial hen's teeth. 

But suppose that instead of these “open” 
accounts your treasurer held trade acceptances 
from your customers covering each shipment of 
goods. These acceptances, being in conformity 
with the Federal Reserve Board's requirements, 
are rediscountable at Federal Reserve Banks at a 
lower rate than any other paper. They are al¬ 
most as good as money, so the threatened crash is 
averted. Your position is secure. With business 
generally on such a basis financial panics, such 
as we experienced in former years, would be 
next to impossible. 

Trade Acceptance NOT a Note 

Salesmen who have been using their in¬ 
fluence with customers to introduce the trade ac¬ 
ceptance, report that many object to giving an 
acceptance on the grounds that it is a note. It 
should be made very clear that a trade accept¬ 
ance is NOT a note, but that it bears the char¬ 
acter of a bank check with an exact time limit . 

A note bears interest. A trade acceptance 
does not. A note is usually given to straighten 
up a bad account. A trade acceptance is given 
to cover an individual invoice. A note is a re¬ 
flection of a man's ability to pay. A trade ac¬ 
ceptance strengthens a man's credit standing 


67 




WHAT A SALESMAN SHOULD KNOW 


and is the best evidence of his ability to pay his 
bills when due. 

Unless a customer is fairly well up on 
finances he will have difficulty in comprehending 
the far-reaching benefits of the trade acceptance 
system. To go over the matter with him in all 
its many phases requires considerable time, so 
one salesman who has met with marked success 
in getting his customers to adopt the idea (this 
particular house allows no extra discount for 
signing an acceptance) puts it up to them on 
patriotic grounds. He explains that if we are to 
win the war, we must have money and the only 
way we can get money is to put the whole coun¬ 
try’s business on a cash basis. 

Then he develops this point by painting a 
word picture of what takes place when the buyer 
gives an acceptance to his house. He shows how 
his house will take the acceptance and go to the 
bank and get cash. With the cash it is then in a 
position to buy government bonds, to pay war 
taxes, and do other war work. 

The argument to use depends on the cus¬ 
tomer. Some you must reach through the heart 
as this furniture salesman does, others again 
will respond more quickly to an appeal to reason. 


68 




SOMETHING ABOUT TRADE ACCEPTANCES 


CJjSgO' 
S-S f zi% 
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W ^SyJ 

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(City pMJrawor) (Date) / 

ON’ 


a A (Dote o( Maturity! 

\JVlAjLAy v^l"GOV\. 


1 4 ^ 

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THE OBLIGATION OF THE ACCEPTOR HEREOF ARliSs Ol 
MAY ACCEPT THIS BILL PAYABLE AT ANY 6 KnK. bXNKER£>R ' 

UJ 


TO (^vn^OaJI Qjlj 

** (Name o( D--' 

3S&! 




No.. 




THE ORDER, OFJ&JRSELyES 

30 ^.^ , 


COLLARS ($. 


PUKCH^E'^O^OODS FROM THE DRAWER. THE DRAWEE 
3 T (fcfyl^HfrpNlTED STATES WHICH HE MAY DESIGNATE 


(Street Atldfeu) pj uJ ^ /\ /? -> S 0 


< < o 

Q 0 . • j 


.7". rr. rr. rr. rr. rr. 


rr. rr. tt.t. rr. m .t.t.t.t.t.t.t r.rr r. rvr : 


We are enclosing herewith Bill op Lading and Invoice for goods shipped you to-day amounting to $. < r^/9..^Z 

thd tarns of which are 2% discount.and...—...^?..<?fe^'^..Net. 

fou will also And attached hereto a Trade Acceptance, properly filled out, to fall due"*on the discount date of 

your Invoice. You will note that the amount of the Trade Acceptance is drawn for $..3&.f!'x£.'(beu\g 
less than the Gross Amount of your Invoice and which represents the amount you will save if you will fill in the blank 
spaces printed in red across the Trade Acceptance as follows: the date accepted, name of the Bank where payable, 
town or place of payment and your signature, returning the Trade Acceptance to us in the enclosed, addressed envel¬ 
ope within ten days from date. If this is not done, terms as shown on the Invoice must be strictly complied with. 

Our regular rate of discount is 2%, but as a special inducement to you to introduce this new form of settle¬ 
ment, you will note we ore allowing you one-half of 1 % additional, or 2y 3 %, provided you complete the transaction, 
as above. 


Under this new system j'onr discount is allowed at once and your Invoice will be stamped ‘'Paid" and re- 
hirned to you promptly. This form of settlement was enacted and its adoption by business in general is recommended 
by the United States Government; also its use is strongly urged by the Federal Reserve Banks, the National Asso¬ 
ciation of Credit Men and by all of the leading Bankers of the country. 

A Trade Acceptance k not m Note, but bears the character of a bank check with an exact time limit, therefore, 
by signing this Trade Acceptance you merely acknowicdge a debt in «ur favor for merchandise we have shipped, 
yen agreeing to pay on a certain date and at a certain place. It is an improved method for both the buyer and 
seller in settling accounts, and we believe will be in very general use when its merit is known’ and appreciated. 

We can deposit this Trade Acceptance in our own bank, thereby giving us immediate use of the money in¬ 
vested in the merchandise Shipped, without extra cost to you. Our bank can re-discount the Trade Acceptance with 
the Federal Reserve Banks, who may in turn, if necessary, issue new currency under certain regulations for Trade 
Acceptances in their hands. You will readily understand, therefore, that the general use- of the Trade Acceptance 
will be of vast benefit to the United Slates Government in providing additional money when the demand is so gr-cat 
for the floating of Liberty Bond issues. Income and Excess Profits Taxes and the other money requirements- of the 
country in the successful prosecution of the great war in which we arc engaged. When you sign and return this Trade 
Acceptance to us you are performing a patriotic service—-the paper is instantly available for discount by us and your 
opcu account with us is at onc« converted into actual liquid capital. 

According to a Federal Bank Governor’s opinion the signing of a Trade Acceptance increases tlie financial 
standing of the giver because it shows prompt paying methods. Any minor claims or differences either way, arising 
from your purchase from us can be adjusted by check. Trade Acceptances are not subject to renewal and.it is ex¬ 
pected that they will be paid when due. Your eo-operalion in assisting us to perform a patriotic duty to our Govern# 
ment .will be appreciated. 


Trade Acceptance Form Used by Large Manufacturer 

It carries a special explanatory attachment which tells 
the customer how much he will save by signing- the paper 
and something of its purpose. 


69 






























WHAT A SALESMAN SHOULD KNOW 


The headway which the trade acceptance 
system has made so far is due in no small meas¬ 
ure to the active support it has received from the 
salesmen of the country. It works out in actual 
practice something like this: Suppose you are a 
salesman traveling for a big shoe manufacturer. 
You sell a bill of goods amounting to $500 to 
the Bingville Shoe Company, of Bingville. Under 
the old plan the Bingville Shoe Company have 
an open account with your house, and pay for 
what they buy when they feel like it. But your 
house, in line with the recommendations of the 
Federal Reserve Board, has adopted the plan of 
using trade acceptances. So when the order is 
shipped to the Bingville people a trade accept¬ 
ance is sent with the invoice. 

How the Trade Acceptance Works Out 

When this trade acceptance is received by 
the Bingville Shoe Company, an official of that 
company merely writes the company's accept¬ 
ance across the face, on the lines provided for 
that purpose, and mails it back to your house. 
According to the acceptance the Bingville Shoe 
Company agrees to pay it on August 1st when 
presented for payment at their bank. So on that 
day, your treasurer's office presents it for pay¬ 
ment the same as a note. Or it may be dis¬ 
counted like a note. 


70 




SOMETHING ABOUT TRADE ACCEPTANCES 


“That’s all very well from a banking stand¬ 
point,” you say, “but where does it help me.” 

In the first place, it automatically makes 
for close collections. Every salesman knows 
that he can sell more goods to a paid-up account 
than to an account that is in arrears. 

It helps you through strengthening the finan¬ 
cial position of your house. Again quoting the 
Federal Reserve Bank of Cleveland: 

“The trade acceptance is on its face, an in¬ 
strument representing a particular sale of goods, 
and an absolute acknowledgement of the correct¬ 
ness of the seller’s claims (thereby eliminating 
disputes which so often lose a salesman his good 
customers) as well as a definite promise to pay on 
a certain day. 

“If the acceptance bears the clause prescribed 
by the Federal Reserve Board, ‘The obligation of 
the acceptor thereof arises out of the purchase of 
the goods from the drawer.' It is prime commer¬ 
cial paper rediscountable at Federal Reserve Banks 
at a lower rate than any other paper. 

“Therefore, every seller who has Trade Ac¬ 
ceptances on his hands, instead of open book ac¬ 
counts, puts himself in a position to be treated 
more liberally by his bank, and consequently is 
enabled to handle additional business, or if re¬ 
quired to carry a customer who is temporarily em¬ 
barrassed, or to tide over a seasonable period of 
reduced volume of business. 

All these advantages to the seller in turn 


71 




WHAT A SALESMAN SHOULD KNOW 


help the salesman. They are passed on to the 
buyer, your customer, in the form of more satis¬ 
factory terms, lower prices or better credit. All 
of which means more business for the salesman . 
In addition to this direct gain, the trade accept¬ 
ance has other advantages which affect you as a 
salesman. 

First, those of your customers who are not 
in a position to take cash discounts will be better 
able to compete with competitors who now hold 
this advantage over him. Second, the use of 
trade acceptances by your customer gives him 
better credit standing. A trade acceptance es¬ 
tablishes rather than reflects on your customer’s 
credit. Third, and most vital of all, by making 
a definite promise to pay on a certain day, your 
customer trains himself to become a better 
buyer. 


72 




PART TWO 


Information for a Salesman to Pass On to 
His Customer 

I—Your Customer and Your Future. 

II—Your Customer and His Buying. 

III— Your Customer and His Credit Policy. 

IV— Your Customer and His Collections. 

V—Credit “Don’ts” for Salesmen. 


73 



“If I Were A Salesman Again— 

I would never resort to deceitful practices, 
but, on the other hand, / would try hard to avoid 
being deceived. I would have a purpose in view 
for each man I sold—to build him up if weak, 
to encourage him if depressed, to give him a 
broader view of business and life, and make him 
more successful by using his own resources. 

If my order was rejected as a bad credit 
risk, and I considered the man worth while, I 
would keep on trying to sell him, but on a cash 
basis until, with my help, he established himself 
and fulfilled my expectations. 

F. H. WELLINGTON, 

General Manager , South Bend Watch Co. 


74 






I—Your Customer and Your 
Future 

Salesmanship has outgrown its swaddling 
clothes. Selling is no longer a mere matter of 
taking orders. The modern salesman, to achieve 
maximum success, must be many sided. He 
must not only know how to get the business, but 
he must know how to build business. This is 
the new idea in business. And you will observe 
that practically all the far sighted salesmen in 
the country are absorbing the spirit of this idea. 

You cannot expect your customers to pros¬ 
per if you grant them more credit than their 
business justifies. It is not unusual to hear, in 
the loose-talk among salesmen in hotel lobbies 
and Pullman smokers, criticism of the credit 
man who would not pass a certain order. The 
next time you meet one of these disgruntled ones, 
ask him if it ever dawned on him that perhaps 
the credit department was in reality doing him 
a favor, even though it came disguised. 

To succeed in life, we must build as we go. 
If we undo tomorrow the work we have done 
today, we would be in much the same position as 
a cat chasing its tail. We could strive on for¬ 
ever, setting a faster pace every day, yet we 
would never get anywhere. Whether you know 
it or not, your credit department is an ever-pres- 


75 


WHAT A SALESMAN SHOULD KNOW 


ent force in helping you build for the future as 
you go along. 

You cannot expect your customer to prosper 
if he has not been “sold” on the value of credit 
co-operation. It is to your interest to educate 
your customers to the mutual advantages of fur¬ 
nishing the credit department with occasional 
financial statements, and that it is to their ad¬ 
vantage to take inventory at regular intervals. 

Good credit enables your customer to add 
to his ability to do business, thus enabling him 
to carry a more complete stock, to increase his 
sales, and to multiply his profits. There is only 
one way in which he can achieve a good credit 
reputation, and that is to adopt a co-operative 
attitude toward a grantor of credit. It is your 
duty, as a salesman and as a friend of your cus¬ 
tomer, to constantly remind him that his most 
valuable possession, apart from his actual as¬ 
sets, is a sound, substantial and unquestioned 
reputation as a credit risk. 

In Case of Fire — What? 

You should interest yourself in fire protec¬ 
tion as a factor in your customer’s continued suc¬ 
cess. Even the matter of urging customers to 
carry adequate fire insurance is not outside your 
sphere of interest. 


76 




YOUR CUSTOMER AND YOUR FUTURE 


A salesman for a large Chicago wholesale 
house told the writer not long ago about an ac¬ 
count in Duluth which he had built up from 
nothing to where the annual purchases ran to 
over $20,000 a year. This salesman was very 
close to the merchant, and he had been able to 
help him in many ways. The merchant looked 
to the salesman for advice, and gave the sales¬ 
man practically a free hand in his buying. 

The account was just getting around to 
where it was a “nice thing” for the salesman 
when a fire came along and undid in a few hours 
what it had taken the merchant and salesman 
several years to build. The merchant carried 
only a nominal insurance. He started up again 
but the capital available was not enough and he 
soon became discouraged and failed. All the 
work which this salesman put in on that account 
went for nothing. Make it your business to see 
that your customers not only carry enough in¬ 
surance to pay back what they owe, but enough 
to get a fresh start in case of fire. 

In Case of Death — What? 

Similarly, you should be interested in seeing 
that as many of your customers as possible take 
out business insurance. The records of commer¬ 
cial agencies show that nearly thirty per cent of 
failures among co-partnerships are due to death 


77 




WHAT A SALESMAN SHOULD KNOW 


for which no provision is made. The proceeds of 
an insurance policy would greatly lessen the dif¬ 
ficulty of securing a satisfactory successor, and 
it would counteract the effect of the loss by en¬ 
larging the financial resources. 

Opportunities frequently arise during a 
salesman’s conversation with customers, when 
he can drop a suggestion or two about commer¬ 
cial insurance, which may some day be the means 
of saving a good account. 

But these are only a few ways in which a 
wise salesman will build his own future through 
developing better customers. Every salesman 
knows many other ways. But knowing them is 
not enough —practice them. 

“But,” you say, “I am too busy selling.” 
True, you are busy. But it is not suggested that 
you take any time away from selling to do good¬ 
will work. It should be a by-product of your 
regular work. Work just as hard as ever getting 
orders, but utilize more of the time which you are 
now letting slip through your fingers. It is this 
extra margin of effort that makes the difference 
between the average salesman and the top- 
notcher. 


78 




II—Your Customer and His 
Buying 

An investigation was conducted some time 
ago by the Wholesale Men's Furnishing Asso¬ 
ciation to determine the causes for retail fail¬ 
ures. It was found that the three chief reasons 
in this particular field were (1) overstocking, 
(2) attempting to carry too high grade stocks 
for the locality, (3) lack of adequate accounting 
methods. 

If this finding means anything to a salesman 
it means that it is to his selfish interests to give 
a customer his very best advice on buying prob¬ 
lems. Most salesmen know this, and do try to 
help the customer buy to best advantage. So 
many buyers, however, are suspicious of a sales¬ 
man that many salesmen who try to be of help 
soon get discouraged and go out after all they 
can get, “while the getting's good." 

In his able book, “Men Who Sell Things," 
Walter D. Moody tells about a very successful 
salesman who won his way to the top by the use 
of self-restraint in selling. Mr. Moody says 
that when he first met this salesman he was 
very much cast down because his firm had 
decided to let him go—at least they had implied 
as much in a letter. His sales did not seem as 
large as his territory warranted. 


79 


WHAT A SALESMAN SHOULD KNOW 


One day he happened to meet Mr. Moody 
and took him into his confidence. He told him 
about his plan for building up trade. This plan 
was quite logical, but unfortunately during the 
two years he had been representing his firm he 
had never been able to secure their confidence to 
an extent where he dared to confide his plan to 
them. 

Mr. Moody encouraged him to persist in his 
methods, assured him that they were bound to 
win, because whether he knew it or not, he was 
working along highly scientific lines. At the 
same time the salesman was urged to take his 
sales manager more fully into his confidence, 
pointing out that only through understanding 
could his plan succeed. This the salesman did, 
and his plan met with the full-hearted approval 
of his manager, just as it did with Mr. Moody. 

Why This Man Won Success 

Today this salesman enjoys a reputation as 
a high-grade salesman, and is considered one of 
the best men that house has on the road. Yet his 
plan was extraordinary simple. Upon making a 
new town he looked the ground over carefully. 
He planned his work, not from the standpoint of 
today, but from the standpoint of tomorrow. The 
prospect for immediate sales failed to dazzle 
him. 


80 




YOUR CUSTOMER AND HIS BUYING 


When calling on his trade in a large city, 
it was entirely foreign to his policy to jump in 
and sell every merchant who would pass muster 
with the credit department. Instead, he care¬ 
fully looked the ground over, and laid a founda¬ 
tion among a limited number of the very best 
merchants. Then he deliberately set out to se¬ 
cure their confidence. He did this, not by trying 
to sell them the largest bill every time he had a 
chance, but often by selling them the smallest 
bill possible. In selling a new customer, it was 
his plan to sell merely a starting or “sorting up” 
order. From the small vantage point gained, 
step by step he followed up his work, never per¬ 
mitting himself to betray a confidence once re¬ 
posed in him by overloading a customer. 

Building on a Permanent Foundation 

Such clear-headed tactics could not help but 
win. It was slow going at first, but finally his 
seeds took root and he reaped a harvest. 

The salesman who has succeeded in building 
up this sort of a foundation, as you know, puts 
himself in an enviable position indeed. But he 
should be on his guard all the time not to do any¬ 
thing which will undermine a merchant’s respect 
for him and his house. Make it clear to your 
customer that his interests are your interests, 


81 




WHAT A SALESMAN SHOULD KNOW 


but at the same time make him feel that you are 
loyal to your house. 

One of the ablest sales managers in the 
United States marketing an automobile horn 
through exclusive agencies, received a letter 
from one of his salesmen to the effect that some 
of the agents, in spite of their contract, were 
handling competitive horns. The sales manager 
wired the salesman as follows: 

“Have you taken matter up with agents men¬ 
tioned regarding throwing out K - line?" 

To this telegram the salesman replied: 

“In view of pending order thought best not to 
mention breach of contract at this time." 

The sales manager's letters to both the salesman 
and to the offending dealer were very much to 
the point. Here is the concluding paragraph of 
the letter to the salesman: 

“Never be afraid of antagonizing a customer 
if he asks you to break a house policy. That is the 
only way you can gain his respect. We have al¬ 
ways gone on the ground that there is no jobber 
In the United States who is bigger than our policy, 
and this has been the key-note of our success." 

This is sound advice for any salesman to follow. 
Establish a dead line in your relations with cus¬ 
tomers. It is^all very well to give them every 


82 





YOUR CUSTOMER AND HIS BUYING 


help in buying salable and business building 
merchandise, but don’t do anything that will 
lower you in their sub-conscious mind. The im¬ 
portance of this is one of the hardest things for 
the young salesman to realize, and many older 
salesmen who have learned this lesson forget it 
at times. 


Be the Big Man in the Sale 

Take the matter of an extra discount, or an 
extra “thirty days” for example. A customer, 
if he is a shrewd buyer, makes the salesman feel 
that if he does not get some extra concession he 
will place his order elsewhere. If the salesman 
is inexperienced, or overanxious for business, he 
will make the mistake of “stalling.” 

“Of course, that’s up to the house,” he may 
say, “but I will tell you what I’ll do. I will write 
our credit man a personal letter and see what I 
can do for you. If it was up to me, I’d do it in 
a minute.” 

So the salesman, knowing in his heart that 
a rule is a rule, and that there is no chance what¬ 
ever of his being able to get the terms he wishes 
because of the policy of his firm to treat all 
customers with equal fairness, wires the house. 
He figures if nothing else, he will get a telegram 
back which he can show the customer. Probably 
he will, but what is more likely he will get back 


83 




WHAT A SALESMAN SHOULD KNOW 


a telegram such as one young salesman received 
from his sales manager: 

“Certainly not. Your telegram cost you 
$1.50.” 

Now, what takes place in the customer's 
mind while all this is going on? The salesman 
thinks he has raised himself a peg in the custom¬ 
er's estimation by a display of interest in his 
welfare. Has he? On the contrary, about all he 
has succeeded in doing is to arouse the suspicion 
in the buyer's mind that perhaps others are get¬ 
ting more favorable terms, inasmuch as the sales¬ 
man is willing to try. So both the house and the 
salesman go down, instead of up, in his estima¬ 
tion. It would have been much better for the 
salesman to have explained that he would be 
glad to take the matter up with the house, only it 
would be as much as his job is worth to even sug¬ 
gest that the house give one customer terms 
which they would not be willing to extend to all 
their customers. 

Help your customers all you can in their 
buying, but conduct yourself in a way which will 
win and hold their respect as well as their friend¬ 
ship—for friendship without respect is a foun¬ 
dation built on quicksand. 


84 




Ill—Your Customer and His 
Credit Policy 

How many of your customers have any defi¬ 
nite policy or plan which they follow regarding 
credits and collections in their business? 

Not many, we will venture. Perhaps you 
have never made any effort to find out? While it 
is true that your business primarily is selling 
goods, it will pay you well, when opportunity 
presents itself, to urge upon your customers that 
they draw up on paper some definite credit 
standards which they can follow in their own 
business. 

It* would be difficult to lay down here any 
set of standards which you could pass along 
bodily to your customers as a suggestion, because 
such standards are naturally affected by the 
character of the customer’s business. 

The abuse of credit, however, is most marked 
in the retail grocery business, so the platform 
set up by one very successful retail grocer^ 
John H. Schaefer, president of the National 
Association of Retail Grocers, may be of some 
interest. His platform is as follows: 

“My views on the credit and collection prob¬ 
lems of the retail grocer are based on experience. 
After twenty-five years in the retail grocry busi¬ 
ness I have evolved a system which is proving 


85 


WHAT A SALESMAN SHOULD KNOW 


quite satisfactory. I realize that conditions in 
other parts of the country and in different kinds 
of communities may make necessary different 
methods, but, after all, the principles upon which 
credit policies are based are very much the same 
everywhere. There are men in every town whose 
words are as good as their bonds and there are, 
unfortunately, always a few who will bear 
watching when it comes to granting credit. 

What Cash in Bank Will Do 

“Before opening an account with a new cus¬ 
tomer I always insist on references and explain 
that the policy of my store is prompt payment, 
for, by insisting upon prompt payment from my 
customers, I am able to pay the bills of the 
wholesaler promptly in ten days and obtain the 
cash discount which enables me to sell goods 
cheaper, to the ultimate advantage of my cus¬ 
tomers. Also, by having the reputation of pay¬ 
ing my bills promptly, I am often offered bar¬ 
gains for cash, the benefits of which I am able 
to pass on to my trade. 

“In order not to make this article too long I 
have jotted down several things which I believe 
every merchant should consider in adopting a 
sound credit policy: 


86 




YOUR CUSTOMER AND HIS CREDIT POLICY 


1. Know customer before extending credit. 

2. Insist upon references and investigate 
them before extending credit to strangers. 

3. When the prospective customer hesitates 
to give references, hesitate in taking the order. 

4. Explain that it's necessary to know when 
to expect payment in order to meet your own bills. 

5. Show that by paying your own bills 
promptly in ten days you are able to sell goods 
more cheaply and by paying cash you can often 
pick up bargains which you can pass on to your 
customers. 

6. Send out promptly your statements every 
week, every two weeks, or every month, according 
to the understanding you have with your customers. 

7. Insist upon full payment every month and 
request your customer to call, or see him person¬ 
ally, before you grant a longer extension of credit. 

8. Do not let your customers decide when 
they want to pay their bills. That’s your job. 

9. Remember that the possible loss of a few 
customers who won’t pay promptly is offset by the 
advantages of prompt payment. 

10. Don’t be satisfied with merely a financial 
rating on a customer, but learn something of his 
character and general reputation. 

11. Study your customers and don’t trust 
those who leave a bad impression. 

12. Have the ppurage to say “No.” Thousands 
of merchants have lost thousands of dollars be¬ 
cause they would not say “No.” 


87 




WHAT A SALESMAN SHOULD KNOW 


13. Never abandon hope of collecting an old 
account. 

14. Try the method of sending statements 
only to your surest customers. Use one of your 
clerks and a bicycle for the collection of all other 
accounts. 

15. Personally examine every uncollected ac¬ 
count and have a reason for the failure of your 
customer to pay promptly. 

16. Help to eliminate the “dead beat” by giv¬ 
ing careful attention to all requests you may re¬ 
ceive for credit information. 

17. Boost your local credit interchange bureau. 

18. Make sure your book-keeping is accurate; 
that every charge is made and made correctly. 
Don’t let your customers first discover the errors. 

This platform is sound. It has helped one 
merchant get to the top of his business, and it 
will help, with necessary modifications, other 
merchants—your customers. Whenever you get 
a chance, talk the points enumerated in this plat¬ 
form to your customers, and watch their business 
and your business grow! 


88 




IV—Your Customer and His 
Collections 

As a salesman it is highly desirable that you 
do all you can toward getting your customers 
to realize the importance of getting their money 
in quickly, so that they will have this capital 
to use in buying more merchandise. 

It used to be that it was necessary for a 
business man to be very lenient in the matter of 
collecting money, and even today there are mer¬ 
chants who are afraid to press collections for 
fear of driving away trade. But the time is at 
hand when merchants should get together and 
put an end to playing the banker for a lot of 
slow-paying customers. 

Often a salesman can use his influence to get 
the local business men's association to take con¬ 
certed action in this respect, and get all the mer¬ 
chants in town to abolish credit sales. This is 
being done all over the country, and in every case 
it is working out well. Just the other day our 
attention was called to an advertisement which 
appeared in the newspapers of Sutton, Nebraska. 
This advertisement stated that on a certain day 
all open accounts would be abolished by the re¬ 
tail merchants of that town, and explained the 
economic advantages to the townspeople of the 
cash or C. 0. D. plan. 


89 


WHAT A SALESMAN SHOULD KNOW 


Under the Sutton plan all unpaid accounts 
were treated as past due and payable on the day 
the new ruling became effective, and interest at 
the rate of ten per cent was charged after that 
date. The advertisement was signed by twenty- 
seven merchants, and the reason for the move 
'was stated as follows: 

“Under old conditions the retailer bought from 
the wholesaler on terms of thirty and sixty days, 
but at the present time our goods are sold to us 
on ten days’ time, which to all practical purposes 
is cash, for It now takes ten days to obtain the 
goods. After May 1, we will keep no book accounts 
whatever and we sincerely ask that you do not 
request credit, as we will have no place to make 
the charge, and neither of us would be satisfied if 
we were to try to keep this memorandum from 
memory.” 

The time is especially opportune for mer¬ 
chants in rural districts to put their business on 
a sounder footing by putting into effect a more 
rigid policy in regard to collections. This was 
pointed out by William Moffet, of the Imperial 
Bank of Canada, in a recent address to Canadian 
merchants. 

“At present farmers are receiving exception¬ 
ally high prices for everything they produce,” 
said Mr. Moffet, “and should be in a position to 
oay their store accounts, mortgages and bank 
s>ans. It is very much in the interest of the 


90 




YOUR CUSTOMER AND HIS COLLECTIONS 


storekeeper and of the community at large that 
advantage be taken of the present situation to 
collect outstanding accounts, especially those 
that have in the past been inclined to be slow. 
Farmers have heretofore been, as you know, con¬ 
sidered dilatory in their payments even when in 
a position to pay, but if their accounts and the 
accounts of wage-earners are allowed to run 
until conditions change on account of unsatisfac¬ 
tory crops, lower wages or prices, or for any 
other reason, merchants will have to face hard 
times with large amounts outstanding, having 
lost the opportunity of putting their business 
upon a safe and sound footing during a period of 
agricultural and business prosperity.” 

How Merchants Use Trade Acceptances 

To keep their collections in better shape, 
many merchants are now requiring their cus¬ 
tomers to give them trade acceptances. One such 
merchant writes the “Trade Acceptance Jour¬ 
nal^ as follows: 

“Through the efforts of a salesman for a large 
business house from whom I have been purchasing 
goods, I was induced to adopt the trade acceptance 
in my own business, giving acceptances as a buyer 
and asking acceptances as a seller. It is now one 
year since I have put my business on that basis and 
I am exceedingly well pleased with results. 

“The use of the trade acceptance has enabled 


91 




WHAT A SALESMAN SHOULD KNOW 


me to use the capital which I formerly had tied up 
in accounts receivable. First, I found I could buy 
$5,000 in Liberty Bonds. Then I used part of the 
remainder for new store fixtures and a delivery 
truck. I was also enabled to obtain better prices 
on certain merchandise through buying in larger 
quantities and discount certain invoices." 

One very good point to keep in mind in mak¬ 
ing collections is that they should be made by the 
calendar. A man may tell you he will pay you 
as soon as cotton commences to move. Although 
cotton usually commences to move about Decem¬ 
ber 1st, it is far better to get your man to promise 
definitely to pay your bill on December 1st. In 
asking for money always request it by such and 
such a date. This not only shows urgency, but 
long experience has shown it most effective. 

Getting in the Hopeless Dollars 

Writing in Collier’s Weekly, William Max¬ 
well, vice-president of Thomas A. Edison, Inc., 
says: “I believe that one of the most important 
things in the collection business is getting your 
debtor to do something. This phase ‘do some¬ 
thing’ appears quite frequently in dunning let¬ 
ters, and is often used by collectors in their oral 
interviews with debtors. It is a good underlying 
motive for a collector to have, but it should not 
be defined in such general terms. The something 


92 




YOUR CUSTOMER AND HIS COLLECTIONS 


a collector wants a debtor to do should be defi¬ 
nitely in the collector’s mind and approached 
with all the adroitness at the collector’s com¬ 
mand. 

“I remember that one December, about ten 
years ago, I decided to send out a New Year’s 
greeting to a lot of debtors whose indebtedness 
we intended to write off the books as uncollect¬ 
ible at the then fast approaching close of our 
fiscal year. The letter which we sent out was 
pronounced by my superior officer ‘about the sil¬ 
liest thing I ever saw.’ 

A Letter That Brought Results 

“It started out with a more or less poetic ref¬ 
erence to the dawn of a new year. We proceeded 
on the assumption that delinquent debtors are 
particularly conscious of their indebtedness on 
January 1st, although I do not believe they are, 
nor that the emphasis laid on this point had any¬ 
thing to do with the success of our letter, except 
as it afforded a slightly different and decidedly 
less peremptory introduction than is found in 
most dunning letters. The important money¬ 
getting paragraph of the letter proved to be the 
following: 


93 




WHAT A SALESMAN SHOULD KNOW 


“From what we believe to be true of you as a 
man, the fact that you have not paid us, can mean 
but one thing, namely; that circumstances over 
which you have no control have prevented you 
from paying. 

“It would be an impertinence for us to in¬ 
quire into those circumstances. They are a part 
of your own private affairs. All that we ask of you 
now is to tell us when you will pay. If you name 
a date when you will pay we know you will do it. 

“Your statement of the exact date upon which 
you will pay us will be helpful to us, because we 
have the same problems of raising money that you 
have. We are a large concern, to be sure, but for 
the same reason that a farmer keeps no more 
horses in his stable than he needs to plow his 
corn, we keep no more money in our business than 
we actually need. 

“Therefore write us when you will pay, a little 
cash will also be appreciated if you can spare it 
now." 

“You can't blame the man who called this 
a silly letter, yet it brought several hundred dol¬ 
lars in cash and promises that ultimately netted 
several thousand dollars. One of the latter 
came from a gentleman who was discharged in 
bankruptcy. He said: ‘I guess you don't know 
that I am an adjudged bankrupt and don't 
owe you a cent under the law. If you did you 
wouldn't write me that way. I don't have to pay 
you, but I will on May 1.' And he did." 


94 




YOUR CUSTOMER AND HIS COLLECTIONS 


This incident is mentioned here because it 
holds three very valuable collection morals of 
value to a salesman in passing on to his custom¬ 
ers, and even in collecting his own accounts. The 
first moral is that if you can tie a man down to a 
definite promise to pay on a certain day, when 
you fail to get the money, you have taken a big 
step toward collecting the account. The second 
moral is that sympathetic understanding, and 
the assumption that a man intends to pay as 
soon as he gets the money, catches more dollars 
than threats and lawyers’ letters. And the third 
moral is, never give up, for as long as there is a 
debt there is hope. The important thing is to 
keep the debtor doing something. 


95 




Credit “Don’ts” For Salesmen 

Let the small customers buy their carloads 
of unprofitable goods from the other fellow. 
These sales usually run up so high that you are 
not free to sell them as much profitable goods 
as they really need. 

* * * 

Don’t say a man is “As Good as Gold,” etc. 
Give the Credit Department facts as you know 
them so that they may be corroborated. That 
good looking stock may not be paid for and his 
farm may be in his wife’s name. 

* * * 

Don’t delay sending in credit information. 
Many salesmen make it a rule to make a daily 
credit report to the house. They find that by 
compelling themselves to concentrate for a few 
moments each day on this matter, they recall 
many facts. 

* * * 

Don’t be afraid to ask a man for an advance 
payment when it is necessary. Assume, as a 
matter of course, that he ought to make it, and 
that he expects to make it. Do not assume that 
he is going to find fault with the idea and that 
you must apologize and make excuses for it. 

* * * 

Don’t think that because a slow pay cus¬ 
tomer is good for what he owes that his account 


96 


CREDIT DON’TS FOR SALESMAN 


is always desirable. It may cost more to carry 

him that his business is worth. 

* * * 

Don’t let your friendship for your customer 
guide you in sending in information regarding 
his credit standing. You cannot expect to help 
your customers prosper by granting them more 

credit than their business justifies. Tell them so. 

* * * 

Don’t blame the credit man for “sitting on 
orders,” if you have not furnished a complete 
credit report. Remember the credit man must 
make no mistakes. There is no department in 
the business where a blunder may prove so 
costly. 

* * * 

Steer clear of the man who spends money 
that belongs to his business. The high liver, 
however prosperous he may appear, is a menace 
to credit. 

* * * 

Don’t be fooled by the buyer who places his 
orders with a lavish hand. The wary salesman 
is always suspicious of the man he can sell with¬ 
out effort. A reckless buyer invites failure from 
the start. 

* * * 

You can’t fool the ledger. Many salesmen, 
like the ostrich that hides his head in the sand, 
point only to the bright side in the blind hope 


97 




WHAT A SALESMAN SHOULD KNOW 


that the other side will not be detected. Sooner 
or later the tell-tale truth will come out in the 

ledger, and your measure taken. 

* * * 

Leave the lame ducks for the other fellow. 
There is no sport in taking a shot at the winged 
bird simply to bag the game. Go after “halo” 
accounts; there is enough of them in every man's 
territory. 

* * * 

Don't fail to impress on your customers 
that his most valuable asset, next to cash in the 
bank, is a sound, substantial and unquestioned 
reputation as a credit risk. To enjoy such a 
reputation he must co-operate in giving credit 
information. 

* * * 

Don't stop trying to sell a “comer” even 
though it was necessary for the credit depart¬ 
ment to refuse him credit now. Sell him on a C. 
0. D. basis until he develops to a point where 
credit is justified. 

* * * 

Above all don't misunderstand the credit 
department. The credit man's work is never 
done. He is first at his desk in the morning and 
the last to leave at night. Don’t add to his cares 
by being churlish in fancying that you are not 
getting a square deal when your orders are oc¬ 
casionally delayed, or ruled out altogether. 


98 













































































































































































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